External Jitters and Peak Results Season May Cap An Oversold Rebound 

KLCI: 1589.78 (1.1)
DOW: 44296.51 (426.2)
MSCI Asia: 182.2 (0.2)
FCPO (RM): 4642 (-130)
BRENT (USD): 75.17 (0.94)
USDMYR: 4.4685 (0.005)
SGDMYR: 3.3132 (-0.01)
EURMYR: 4.6484 (-0.045)
AUDMYR: 2.9004 (-0.007)
GBPMYR: 5.5931 (-0.05)
US: 10-yr yield (%) 4.4002 (-0.022)
BNM:10-yr yield (%) 3.81 (-0.013)

Asia/US. Buoyed by positive cues from Wall St, Asian markets ended higher but gains were limited by a 3% slide on SHCOMP, driven by frustration over the slow rollout of Beijing’s fiscal stimulus, jitters over US-China tensions and disappointing earnings results. Sentiment was also dampened by heightened Russia-Ukraine tensions, with the threat of long-range missiles strikes could escalate into regional and global conflicts. The Dow rallied 1% to close at fresh record high of 44,296, boosted by an upbeat S&P Global US Composite PMI and rotation to Trump trades and economic-sensitive stocks that are expected to benefit from his MAGA policies. This week, focus will shift to the release of the FOMC meeting minutes, PCE inflation data, personal income and spending figures, and the Conference Board's consumer confidence index.

Malaysia. On the back of mixed results season and persistent foreign net outflows, KLCI gave up an early 5.2-pt gain to close +1.1 pts to 1,589.8. Market breadth remained negative at 0.87 vs 0.55 previously while trading volume slid 24% to 2.6bn shares valued at RM2.28bn. Foreign institutions emerged as the major net sellers (-RM39m, Nov: -RM889m, YTD: +RM890m) alongside local retailers (-RM14m, Nov: -RM208m, YTD: -RM4.93bn). In contrast, local institutions (+RM53m, Nov: +RM1.09bn, YTD: +RM4.04bn) were the major net buyers. WoW, foreigners net sold RM165m (local retailers: -RM85m, local institutions: +RM250m), marking its 5th straight weekly outflows, though the pace of net selling tapered off after peaking at RM1.01bn in the week ended Nov 1.

Outlook Given the climax of Nov results season this week and continued foreign net outflows (Nov: -RM889m, Oct: -RM1.77bn), KLCI is likely to consolidate in the near term. Additionally, rising geopolitical tension in Russia-Ukraine, Fed’s rate-cuts uncertainty, China’s weak growth, and Trump 2.0’s MAGA policy, could trigger more market volatility. Nevertheless, oversold technical readings following a 95-pt slump from 52W high at 1,684, and the undemanding KLCI valuation at 13.5x CY25E P/E (5Y average 17.2x) coupled with a decent 4.4% DY25E, may cushion further selloff near 1,566-1,580 zones (resistance: 1,600-1,610-1,625). 

VIRTUAL PORTFOLIO We had squared off our positions on ALPHA (1.4% loss) and ENGTEX (7.4% loss) last Friday due to expiry.

Source: Hong Leong Investment Bank Research - 25 Nov 2024