Persistent Net Outflows by Foreigners May Cap Rebound Near 1,625-1,648 Region

KLCI: 1615.64 (1.6)
DOW: 44765.71 (-248.3)
MSCI Asia: 186.87 (-0.8)
FCPO (RM): 5153 (18)
BRENT (USD): 72.27 (-0.04)
USDMYR: 4.4278 (-0.025)
SGDMYR: 3.3006 (-0.007)
EURMYR: 4.6617 (-0.015)
AUDMYR: 2.8505 (-0.008)
GBPMYR: 5.6323 (-0.013)
US: 10-yr yield (%) 4.1761 (-0.004)
BNM:10-yr yield (%) 3.742 (0.002)

Asia/US. In line with the record closings from US markets, Asian markets rose in early trades while the KOSPI extended declines on potential political crisis. However, ahead of the major US non-farm (NF) payrolls data tonight, investors are staying on edge amid heightened geopolitical risks, lingering concerns over China’s economic challenges and escalating trade tensions with the US under incoming Trump 2.0 “MAGA” policy. The Dow fell from record highs (-249 pts to 44,705) as anxiety brewed ahead of the pivotal NF payrolls report, which could influence the FOMC decision on 18 Dec. Based on consensus, there’s a 70% probability for a 25bps cut at Dec’s meeting vs 66% a week ago.

Malaysia. KLCI recorded its 4th straight gain, inching up 1.5 pts at 1,614.1. Market breadth was cautious at 1.00 vs 1.91 previously, reflected by a slower traded volume at 3.24bn shares (-10% DoD) valued at RM2.74bn (-17% DoD). Foreign institutions emerged as the major net sellers for the 12th consecutive day (-RM122m, Dec: -RM618m, YTD: -RM1.94bn) alongside local retailers (-RM18m, Dec: -RM206m, YTD: -RM5.152bn). In contrast, local institutions (+RM140m, Dec: +RM824m, YTD: +RM7.09bn) were the major net buyers for the 12th consecutive session.

Outlook Ahead of the key US NF payrolls data tonight and extended foreign net outflows, KLCI could tread cautiously with major supports pegged at 1,600-1,603 (200D MA) region. Barring a fall below these supports, the benchmark is poised to revisit 1,625-1,640-1,648 levels, 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%. Technically, HUPSENG (CP: RM1.20, netcash/shr: RM0.12) will be attractive to accumulate on weakness for recovery upside towards the RM1.25 (76.4%FR), RM1.33 (52W high) and RM1.42 (123.6% FR) zones. The Hammer candlestick pattern could limit downside at RM1.15 (50% FR) and RM1.10 (38.2% FR) support levels. 

Source: Hong Leong Investment Bank Research - 9 Dec 2024