Jittery Mode Amid External Headwinds and Persistent Foreign Exodus 

Technical Pick: MUIPROP

KLCI: 1629.79 (4.3)
DOW: 42528.36 (-178.2)
MSCI Asia: 181.97 (0.6)
FCPO (RM): 4370 (5)
BRENT (USD): 77.05 (0.75)
USDMYR: 4.4875 (-0.024)
SGDMYR: 3.3006 (0)
EURMYR: 4.6803 (0.009)
AUDMYR: 2.8198 (0.003)
GBPMYR: 5.6376 (0.01)
US: 10-yr yield (%) 4.685 (0.055)
BNM:10-yr yield (%) 3.8 (-0.029)

Asia/US. Buoyed by overnight technology rally on Wall Street and pledges made by China’s authorities to introduce more monetary and fiscal stimulus, Asian markets ended mostly higher. Sentiment was also briefly boosted by market talks that the incoming Trump administration might adopt less aggressive tariffs than previously anticipated. 

Wall Street ended lower as the US 10-year bond yield spiked 6 bps to 4.68%, following upbeat Dec ISM services and job openings readings. These developments tempered expectations for more Fed’s rate-cuts in 2025. Key focus now shifts to the upcoming release of FOMC minutes (Jan 9), consumer sentiment and non-farm payrolls (Jan 10) reports, which play an influential role in shaping the FOMC decision on Jan 30. 

Malaysia. KLCI gained 4.3 pts to 1,629.8 to end its 3-day losing streak, driven by optimism surrounding the JSSEZ’s signing ceremony, news that Trump’s upcoming tariff plan would be narrower than expected, and China’s pledges for more economic support and lower interest rates this year. However, market breadth remained negative at 0.80 vs 0.87 previously, with trading volume surged 12% to 3.81bn shares valued at RM3.30bn. Foreign institutions continued their net outflows for the 4th day (-RM106m, Jan: -RM262m, Dec: -RM2.88bn) alongside local retailers (-RM38m, Jan: -RM37m, Dec: -RM797m) while local institutions (+RM144m, Jan: +RM299m, Dec: +RM3.68bn) were the sole net buyers.

Outlook We expect KLCI to stay choppy in Jan following a 3% rally in Dec 24 (resistance: 1,647-1,661) as investors are likely to weigh the implications of Trump 2.0 policies (post Jan 20 inauguration), persistent geopolitical risks, China's economic challenges and weak CNY, as well as major central banks’ policy decisions. However, downside risk may be cushioned near 1,600-1,610-1,623 zones, buoyed by: (i) Malaysia’s resilient GDP growth; (ii) robust investment pipeline; and (iii) stable political climate. 

Technically, MUIPROP’s (Proforma BVPS post land disposal in Springhill: RM0.65; proforma net gain RM124m/EPS RM0.17) pullback from RM0.46 (2W high on 30 Dec) to RM0.375 yesterday appeared to have found temporary support above the RM0.345 (uptrend line from 52W low of RM0.16) and RM0.355 (lower BB) territory. Barring a decisive breakdown below these levels, the stock may revisit RM0.40 (100D MA) next. A confirmed breakout above RM0.40 hurdle could lift prices towards RM0.435 (61.8% FR), RM0.46, and potentially RM0.51 (52W high).

Source: Hong Leong Investment Bank Research - 8 Jan 2025