Record highs in the US markets and positive technical readings may spur KLCI towards 1,625-1,640-1,648 zones 

Technical Pick: MENANG 

KLCI: 1614.09 (7.1)
DOW: 45014.04 (308.5)
MSCI Asia: 186.87 (-0.8)
FCPO (RM): 5074 (42)
BRENT (USD): 72.31 (-1.31)
USDMYR: 4.4528 (-0.017)
SGDMYR: 3.3077 (-0.016)
EURMYR: 4.6765 (-0.026)
AUDMYR: 2.8584 (-0.045)
GBPMYR: 5.6449 (-0.021)
US: 10-yr yield (%) 4.18 (-0.045)
BNM:10-yr yield (%) 3.74 (-0.017)

Asia/US. Ahead of a slew of jobs data and remarks from the Fed speakers, Asian markets ended mixed after a sudden declaration and revocation of martial law in Korea. Economic uncertainties in China, exacerbated by a planned Trump 2.0 “MAGA” policy, also weighed on the sentiment. The Dow (+309 pts to 45,014), Nasdaq (+252 pts to 19,733) and S&P 500 (+36 pts to 6,089) all scaled to record closings, taking cues from Powell’s bullish remark on the US economy and achieving a neutral monetary policy stance, overshadowed mildly negative private jobs data and S&P Global US Composite PMI. 

Malaysia. KLCI recorded its 3rd straight gain, rising 7.1 pts at 1,614.1, led by bargain hunting on YTL, YTLPOWR, TENAGA, PCHEM, IHH and IOICORP. Market breadth was bullish at 1.91 vs 1.58 previously, supported by 3.6bn shares valued at RM3.3bn. Foreign institutions emerged as the major net sellers for the 11th consecutive day but the selling pace has reduced sharply (-RM28m, Dec: -RM495m, YTD: -RM1.82bn) alongside local retailers (-RM126m, Dec: -RM189m, YTD: -RM5.13bn). In contrast, local institutions (+RM154m, Dec: +RM684m, YTD: +RM6.95bn) were the major net buyers for the 11th consecutive session.

Outlook Mirroring record highs from the US markets and positive KLCI technical readings, the benchmark is poised to revisit 1,625-1,640-1,648 levels (support: 1,586-1,600), supported by the “window dressing” effect in Dec, which has had a 90% hit rate for the past 10/20 years with positive returns of 1.5%/1.8%. However, KLCI could face formidable barriers at 1,650-1,660 zones given the exodus by foreign investors, lingering geopolitical tensions, Fed’s rate-cuts uncertainty, China’s weak growth, and Trump 2.0’s MAGA policy.

Technically, after sliding 27.6% to RM0.59 (Nov 25 low) from YTD high of RM0.815 (May 21), MENANG’s (CP: RM0.62, BVPS: RM0.66) share price is showing signs of bottoming up. Any weakness toward RM0.58-0.60 should attract bargain hunters looking for rebound near RM0.66 (200D MA). A successful breakout will spur more upside towards RM0.70, RM0.75 (23.6% FR) and RM0.815 levels.  

Source: Hong Leong Investment Bank Research - 5 Dec 2024