Sideways Consolidation as Investors Gear Up for US CPI Data and Persistent Foreign Net Outflows

Technical Pick: YNHPROP

KLCI: 1608.97 (-2.5)
DOW: 44247.83 (-154.1)
MSCI Asia: 186.79 (-0.8)
FCPO (RM): 4936 (-15)
BRENT (USD): 72.19 (0.05)
USDMYR: 4.4275 (0.002)
SGDMYR: 3.3004 (-0.005)
EURMYR: 4.6628 (-0.013)
AUDMYR: 2.8309 (-0.02)
GBPMYR: 5.6467 (-0.005)
US: 10-yr yield (%) 4.2263 (0.025)
BNM:10-yr yield (%) 3.741 (-0.001)

Asia/US. Asian markets jumped in early trades, led by a surge in SHCOMP following policymakers’ pledge to revive economic growth. However, most markets pared gains as investors wait for more clarity from this week’s CEWC, key US CPI (Dec 11) and PPI (Dec 12) prints, which could influence FOMC’s rate decision on Dec 18. Dow fell for the 4th consecutive session ahead of the key CPI print tonight. Any signs that inflation progress has stalled could well undercut the chances of a rate reduction. On the corporate front, ORCL plunged 6.7% after missing revenue expectations due to stiff competition in the cloud sector while NVDA slid 2.7% amid a Chinese antitrust probe.

Malaysia. Bucking regional markets gains, KLCI fell 2.4 pts to 1,609, posting its 3rd consecutive loss. However, market breadth improved to 1.04 vs 0.65 previously, with 2.74bn shares traded valued at RM2.64bn. Foreign institutions remained the dominant net sellers for the 15th day in a row (-RM120m, Dec: -RM973m, YTD: -RM2.29bn) alongside local retailers (-RM26m, Dec: -RM337m, YTD: -RM5.28bn) whilst local institutions (+RM146m, Dec: +RM1.31bn, YTD: +RM7.57bn) emerged as the major net buyers for 15th consecutive session.

Outlook Ahead of the key US inflation prints and more clarity from China’s fresh stimulus details, 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, we remain optimistic that the index KLCI is slated to break the key 1,618 downtrend resistance, before re-challenging higher 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, after correcting 36% from 52W high of RM0.79 (Dec 3) to a low of RM0.505 (Dec 9), YNHPROP (BVPS: RM2.08) continued to creep higher to end at RM0.54, above major 20/50/100/200 MAs. A confirmed breakout above RM0.565 overhead hurdle (61.8% FR) will boost upside momentum at RM0.605 (50% FR), RM0.65 (38.2% FR) and RM0.705 (23.6% FR) levels, with supports at RM0.505, RM0.495 (200D MA) and RM0.48 (100D MA) seen to cushion downside.  

Source: Hong Leong Investment Bank Research - 11 Dec 2024