Oversold rebound may be capped near 1,610-1,625 zones amid the peak results season and persistent foreign outflows 

Technical Pick: MRDIY 

KLCI: 1597.45 (7.7)
DOW: 44736.57 (440.1)
MSCI Asia: 183.58 (1.4)
FCPO (RM): 4661 (-38)
BRENT (USD): 73.01 (-2.16)
USDMYR: 4.4532 (-0.015)
SGDMYR: 3.3051 (-0.008)
EURMYR: 4.6712 (0.023)
AUDMYR: 2.9004 (0)
GBPMYR: 5.5971 (0.004)
US: 10-yr yield (%) 4.2731 (-0.127)
BNM:10-yr yield (%) 3.817 (0.007)

Asia/US. Tracking the fresh record closing from Dow, Asian markets ended mostly higher as investors favoured Trump-related trades and cyclical stocks likely to benefit from his MAGA policies. Sentiment was also boosted by Trump’s pick of Bessent for Treasury Secretary will help to mitigate the Trump 2.0’s more aggressive trade and economic policy proposals, overshadowed concerns of heightened Russia-Ukraine tensions and China’s fragile economy. 

The Dow surged 440 pts to 44,736 (its 4th consecutive gain and a fresh record high) amid optimism that Trump's nomination of Bessent as Treasury Secretary would help to deliver market-friendly policies and temper extreme protectionist measures.  This week, focus will shift to the FOMC meeting minutes, PCE inflation data, personal income and spending figures, and the Conference Board's consumer confidence index.

Malaysia. Tracking higher regional markets and fresh record closing from the Dow, KLCI rallied as much as 19.1 pts before paring the gains to +7.7 pts at 1,597.5, as investors weighted the final leg of the Nov results season and continued foreign net outflows. Despite the headline gain, market breadth remained negative at 0.93 vs 0.87 previously. Foreign institutions emerged as the major net sellers (-RM213m, Nov: -RM1.1bn, YTD: +RM677m) alongside local retailers (-RM64m, Nov: -RM272m, YTD: -RM5bn) whilst local institutions (+RM277m, Nov: +RM1.37bn, YTD: +RM4.32bn) were the major net buyers. 

Outlook Given the climax of Nov results season this week and continued foreign net outflows (Nov: -RM1.10bn, Oct: -RM1.77bn), KLCI is likely to consolidate in the near term. Additionally, rising geopolitical tensions, Fed’s rate-cuts uncertainty, China’s weak growth, and Trump 2.0’s MAGA policy, may escalate market volatility. Nevertheless, oversold technical readings following a 87-pt slide from 52W high at 1,684, alongside undemanding KLCI valuation at 13.6x CY25E P/E (5Y average 17.2x) and a decent 4.4% DY25E, could limit further selloff near 1,566-1,580 (resistance: 1,610-1,625) range. 

Technically, MRDIY needs to overcome the RM1.92 (38.2%FR)–RM1.98 overhead barriers to fuel recovery further at RM2.05 (23.6% FR) and RM2.26 (YTD high) zones. In contrast, the stock will be attractive to bargain on weakness near RM1.82 (50% FR), RM1.77 (Nov 18 low) and RM1.71 (61.8% FR) support levels.   

Source: Hong Leong Investment Bank Research - 26 Nov 2024