KLCI Wavers With Key Support at 1,589-1,600 

Technical Pick: DXN

KLCI: 1611.5 (3.1)
DOW: 43958.19 (47.2)
SCI Asia: 182.73 (-2.3)
FCPO (RM): 4836 (-151)
BRENT (USD): 72.28 (0.39)
USDMYR: 4.4473 (0.009)
SGDMYR: 3.3262 (0.01)
EURMYR: 4.7261 (0.01)
AUDMYR: 2.9052 (0.001)
GBPMYR: 5.6709 (-0.021)
US: 10-yr yield (%) 4.4512 (0.024)
BNM:10-yr yield (%) 3.853 (0.003)

Asia/US. Asian markets extended its consolidation as investors expected Trump 2.0 planned policies to further stoke inflation and delay the pace of Fed’s rate-cuts. Sentiment was also jolted by Trump’s picks for key government posts with candidates set to carry out his “America First” policies on the border, trade, national security and economy. The Dow surrendered its early 230-pt gain to end +47 pts at 43,958 as investors weighed the in-line Oct CPI data and Trump 2.0 planned policies could spur growth through inflationary measures like tax cuts, deregulation, and extended fiscal stimulus. Investors are now closely watching the PPI and retail sales reports, as well as Powell’s speech later this week for further policy insights.

Malaysia. After falling 25.8 pts in four straight day, KLCI inched up 3.1 pts to 1,611.5. Despite the headline gain, market breadth remained negative for the 5th day in a row at 0.77 vs 0.69 previously, with 2.83bn shares traded valued at RM2.22bn (-9.4% vs avg Nov RM2.45bn). Foreign institutions were the major net sellers for a 5th consecutive session (-RM46m, Nov: -RM631m, YTD: +RM1.15bn) alongside local retailers (-RM27m, Nov: -RM145m, YTD: -RM4.87bn) while local institutions (+RM73m, Nov: +RM776m, YTD: +RM3.72bn) emerged as major net buyers. 

Outlook In wake of the of the Nov results season, KLCI is likely to consolidate further (support: 1,589-1,596; resistance: 1,625-1,641-1,652) due to a lack of domestic catalysts and continued foreign net outflows (Nov: -RM631m, Oct: -RM1.77bn). Additionally, lingering Middle East turmoil and China’s sluggish growth, as well as expectations of more confrontational and protectionist policies under Trump 2.0 could trigger more economic fluidity and market volatility. 

Technically, after diving 37% from IPO price at RM0.70 (listed on May 19) to RM0.44 (YTD low), DXN staged a long-awaited technical rebound to RM0.475 yesterday, forming a bullish spinning top pattern. Another positive closing today, preferably above RM.49 (5D MA) could spur further rebound towards RM0.53 (10D MA) and RM0.56 (20D MA) zones. Downside should be well-supported near RM0.40-0.44 levels, underpinned by undemanding trailing P/E of 7.3x, netcash/share of 11sen and attractive DY of 7.5%.   

Source: Hong Leong Investment Bank Research - 14 Nov 2024