Still Trapped in a Downtrend Channel Amid Persistent Foreign Net Outflows 

KLCI: 1603.2 (-5.8)
DOW: 44148.56 (-99.3)
MSCI Asia: 186.19 (-0.6)
FCPO (RM): 4893 (37)
BRENT (USD): 73.52 (1.33)
USDMYR: 4.4327 (0.005)
SGDMYR: 3.2961 (-0.004)
URMYR: 4.6546 (-0.008)
AUDMYR: 2.8136 (-0.017)
GBPMYR: 5.6435 (-0.003)
US: 10-yr yield (%) 4.2711 (0.045)
BNM:10-yr yield (%) 3.757 (0.016)

Asia/US. Asian markets ended mixed as investors awaited the key US CPI data and more policy and stimulus details from a 2-day closed-door CEWC. The Dow rose as much as 129 pts in early trade as traders cheered an in-line CPI report that consolidated bets of a 25 bps cut on Dec 18 meeting. However, the gains evaporated with the index ended -99 pts at 44,148 amid lingering worries that disinflation trend has stalled, and may refrain the Fed from adopting a more aggressive cuts in 2025, magnified by tariff hikes and tax cuts measures from the Trump 2.0. On corporate front, a 5.6% slide in Dow component, UNH also weighed down the index amid news that bipartisan coalition of US lawmakers has drafted legislation that would force prescription drug middlemen to divest pharmacies they own. 

Malaysia. KLCI fell 5.8 pts to 1,603.2 to record its 4th consecutive loss, dampened by persistent net outflows by foreigners. Foreign institutions remained the dominant net sellers for the 16th day (-RM272m, Dec: -RM1.24bn, YTD: -RM2.57bn) whilst local institutions (+RM264m, Dec: +RM1.57bn, YTD: +RM7.84bn) alongside local retailers (+RM9m, Dec: -RM328m, YTD: -RM5.27bn) emerged as the major net buyers

Outlook Ahead of the FOMC decision on Dec 18 and awaiting more clarity from China’s fresh stimulus details, KLCI could trend sideways with major supports pegged at 1,586-1,600 levels, dampened by persistent foreign net outflows. On the flip side, a successful breakout above the downtrend resistance at 1,617 may lift further rebound towards 1,625-1,640-1,648 levels, supported by the “window dressing” effect in Dec. Historically, this Dec seasonality has had a 90% success rate over the past 10-20 years, with positive returns of 1.5%-1.8%. 

Source: Hong Leong Investment Bank Research - 12 Dec 2024