Critical Support at 1,589 to Cushion Further Slide Towards 1,566-1,577 Region

Technical Pick – HUPSENG 

KLCI: 1600.68 (-10.8)
DOW: 43750.86 (-207.3)
MSCI Asia: 181.34 (-1.4)
FCPO (RM): 4944 (-20)
BRENT (USD): 72.56 (0.28)
USDMYR: 4.4855 (0.038)
SGDMYR: 3.3299 (0.004)
EURMYR: 4.719 (-0.007)
AUDMYR: 2.8995 (-0.006)
GBPMYR: 5.6771 (0.006)
US: 10-yr yield (%) 4.4354 (-0.016)
BNM:10-yr yield (%) 3.886 (0.033)

Asia/US Led by a 1.7% slide on SHCOMP, Asian markets extended its profit taking consolidation, as investors continued to assess the potential impact of Trump 2.0 trade policies and the appointment of anti-China figures on China’s economy. Additionally, Beijing's latest underwhelmed fiscal stimulus measures further dampened sentiment. As the post-election rally faded, the Dow tumbled 207 pts to 43,750 as investors weighed the higher-than-expected core PPI, a 6M low weekly jobless claims and fresh comments from Powell indicated that strong economic conditions allow the Fed to be cautious with future rate cuts. Sentiment was also jolted by Trump’s picks for key government posts with candidates set to carry out his “MAGA” policies on the border, trade, national security and economy. 

Malaysia. Tracking lower regional markets, extended fall in RM (vs USD) and persistent foreign net outflows, KLCI slid 10.8 pts to 1,600.3, triggered by selldown in PMETAL, MAYBANK, YTL, YTLPOWR, SDG and MAXIS. Market breadth remained negative for the 6th day at 0.72 vs 0.77 previously, with 3.15bn shares traded valued at RM2.69bn (+8.5% vs avg Nov RM2.48bn). Foreign institutions were the major net sellers for a 6th consecutive session (-RM67m, Nov: -RM699m, YTD: +RM1.08bn) whilst local retailers (-RM18m, Nov: -RM126m, YTD: -RM4.85bn) alongside local institutions (-RM49m, Nov: +RM825m, YTD: +RM3.77bn) emerged as major net buyers. 

Outlook In wake of the of the Nov results season, KLCI is likely to consolidate further (support: 1,577-1,589-1,597; resistance: 1,615-1,625-1,640) due to a lack of domestic catalysts and continued foreign net outflows (Nov: -RM699m, 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 hitting a 52-week high of RM1.33 (July 5), HUPSENG was engaged in a healthy consolidation before attempting to stage a triangle breakout. A successful cross above RM1.19 (downtrend trendline) could spur further rebound towards RM1.25 (76.4% FR), RM1.33 and RM1.41 (123.6% FR) zones. Downside should be well-supported near RM0.99 (200D MA) and RM1.03 (support trendline), underpinned by netcash/share of 12sen (11% to share price) and attractive trailing DY of 6.3%.   

Source: Hong Leong Investment Bank Research - 15 Nov 2024