Anticipate a Downtrend Channel Breakout Ahead of the Dec Window Dressing Activities

Technical Pick: MUIPROP

KLCI: 1611.43 (-1.8)
DOW: 44401.93 (-240.6)
MSCI Asia: 187.62 (0.8)
FCPO (RM): 5111 (-9)
BRENT (USD): 72.14 (1.02)
USDMYR: 4.4253 (0.006)
SGDMYR: 3.305 (0.008)
EURMYR: 4.676 (0.001)
AUDMYR: 2.8505 (0.011)
GBPMYR: 5.652 (0.015)
US: 10-yr yield (%) 4.2012 (0.048)
BNM:10-yr yield (%) 3.742 (0)

Asia/US. Ahead of the key US CPI (Dec 11) and PPI (Dec 12) prints, which could influence the FOMC decision on Dec 18, Asian bourses ended mixed as investors digested soft CPI and PPI data from China. However, losses were limited by positive remarks from the Chinese Politburo that the government and the PBoC vowed to ramp up more proactive fiscal and moderately loose monetary policies next year to spur growth. The Dow fell for the 3rd straight day (-240 pts to 44,402) ahead of the CPI (Dec 11) and PPI (Dec 12) data. Sentiment was also weighed down by NVDA’s 2.5% slide following China’s probe of the AI chip darling for violating anti-monopoly laws.

Malaysia. After soaring 21.4 pts over the past four days, KLCI slipped 1.8 pts to 1,611.4, marking its 2nd straight decline. Market breadth was negative at 0.65, reversing the positive signals in the last four days. Foreign institutions remained the dominant net sellers for the 14th consecutive session (-RM91m, Dec: -RM853m, YTD: -RM2.17bn) alongside local retailers (-RM12m, Dec: -RM311m, YTD: -RM5.25bn) whilst local institutions (+RM103m, Dec: +RM1.16bn, YTD: +RM7.43bn) emerged as major net buyers for 14th consecutive session.

Outlook Ahead of the key US inflation prints prior to the FOMC decision, KLCI could trend sideways with major supports pegged at 1,600-1,603 levels in the wake of persistent foreign net outflows. Unless the benchmark falls below these supports, KLCI is slated to break the key 1,620 downtrend resistance, before re-challenging higher resistance upside targets at 1,625-1,640-1,648 levels, supported by the “window dressing” effect in Dec. Historically, this effect has had a 90% success rate over the past 10-20 years, with positive returns of 1.5%-1.8%. 

Technically, MUIPROP (CP: RM0.405, BVPS: RM0.47) continued to creep higher, closing above major 20/50/100 MAs following a bullish triangle breakout formation on Nov 28. A decisive breakout above RM0.415 overhead hurdle (50% FR) will boost upside momentum, targeting RM0.465 (76.4% FR), RM0.51 (YTD high) and RM0.525 (4Y high) levels. Meanwhile, key downside supports are pegged at RM0.39 (38.2% FR), RM0.38 (100D MA) and RM0.36 (23.6% FR) territory.  

Source: Hong Leong Investment Bank Research - 10 Dec 2024