Further Rout May be Cushioned by Potential Window Dressing in Dec 

Technical Pick: PMETAL 

KLCI: 1594.3 (-3.2)
DOW: 44910 (188)
FCPO (RM): 5023 (139)
BRENT (USD): 72.09 (0.25)
USDMYR: 4.446 (-0.00)
SGDMYR: 3.318 (0.01)
EURMYR: 4.694 (0.01)
GBPMYR: 5.645 (0.02)
US: 10-yr yield (%) 4.17 (-0.09)
BNM:10-yr yield (%) 3.81 (0.02)

Asia/US. Asian markets ended mixed, as investors weighed the release of an upbeat Tokyo’s inflation data that could drive the BOJ to raise interest rates in Jan 2025, and expectations that Beijing will announce additional stimulus measures during key policy meetings this month to cushion the rising US-China trade tensions. The Dow closed at fresh record high (+188 pts at 44,910) amid optimism that the Trump 2.0 administration will adopt a more business-friendly approach, with growing expectations that the Treasury secretary’s nominee Bessent will help temper tariffs. This week, major economic data on tap are job openings, non-farm payrolls, speeches from Fed officials, ISM Manufacturing and Services PMIs, which could help determine the interest rates path on Dec 18.

Malaysia. In line with the cautious regional markets, KLCI lost 3.2 pts to 1,594.3 as investors assessed the mixed Nov results season and persistent exodus by foreign investors. On fund flows, foreign institutions emerged as the major net sellers for the 8th straight session (-RM545m, Nov: -RM3.1bn YTD: -RM1.32bn) while local institutions (+RM499m, Nov: +RM3.32bn, YTD: +RM6.26bn) alongside local retailers (+RM46m, Nov: -218m, YTD: -RM4.94bn) were the major net buyers. WoW, foreigners net sold RM2.21bn (marking its 6th straight weekly outflows), together with local retailers -RM10m whilst local institutions net bought RM2.22bn.

Outlook Given the conclusion of a mixed Nov results season and persistent exodus by foreign investors, KLCI is likely to extend its consolidation. Additionally, geopolitical tensions, Fed’s rate-cuts uncertainty, China’s weak growth, and Trump 2.0’s MAGA policy, may escalate market volatility. Nevertheless, we may anticipate a technical rebound in Dec (resistance: 1,607-1,625-1,648; support: 1,577-1,588) amid a grossly oversold position (-90 pts from 52-week high 1,684), as well as the “window dressing” effect, which has had a 90% hit rate for the past 10/20 years with positive returns of 1.5%/1.8%.  

Technically, PMETAL (BUY, TP: RM6.21) looks attractive to bargain on dips after plunging 23.7% at RM4.64 from 52-week high (RM6.08) for recovery to RM4.77 (50D MA), with a confirmed breakout to target RM5.02 (38.2%FR) and RM5.22 (50% FR) ahead, while key supports are pegged at RM4.36 (1M low), RM4.44 (lower BB) and RM4.50 zones. 

Source: Hong Leong Investment Bank Research - 2 Dec 2024