Consolidation Ahead of FOMC Meeting, CNY Holidays and Persistent Foreign Outflows 

Technical Pick-FOCUSP

KLCI: 1573.73 (-3.5) DOW: 44424.25 (-140.8) MSCI Asia: 182.9 (1.2) FCPO (RM): 4216 (26) BRENT (USD): 78.5 (0.21) USDMYR: 4.3775 (-0.067) SGDMYR: 3.2502 (-0.025) EURMYR: 4.594 (-0.033) AUDMYR: 2.7677 (-0.016) GBPMYR: 5.4402 (-0.033) US: 10-yr yield (%) 4.6214 (-0.022) BNM:10-yr yield (%) 3.776 (-0.007)

Asia/US. Asian markets mostly ended higher, driven by Beijing’s new measures to support the stock market and Trump’s preference for a trade deal with China over using tariffs. The positive sentiment outweighed the impact of the BOJ’s hawkish stance, which raised interest rates by 25 bps to a 16Y high at 0.5%. 

After rallying 1,412 pts in four straight session, the Dow lost 141 pts to 44,424 on profit taking as investors weighed a mixed batch of corporate results coupled with weak economic data from consumer sentiment index and services PMI. TXN and BA prices declined amid soft earnings while AXP and VZ prices gained on upbeat earnings. This week, attention turns to the preliminary 4Q24 GDP data, PCE inflation report, and the FOMC decision. The earnings calendar is packed, with reports expected from MSFT, META, TSLA, AAPL, IBM, V, MA, CAT, XON, and UPS.

Malaysia. After soaring 32.2 pts in four consecutive day and persistent foreign net outflows, KLCI fell 3.5 pts to 1,573.7 (+7 pts WoW). Profit taking led to a further decline in market breadth at 0.48 vs 0.42 previously, while daily volume eased 7% to 3bn shares valued at RM3.06bn. Foreign net outflows continued for the 17th day in Jan (-RM300m, WoW: -RM701m, Jan: -RM2.63bn) while local retailers (+RM181m, WoW: +RM150m, Jan: +RM859m) alongside local institutions (+RM119m, WoW: +RM551m, Jan: +RM1.77bn) emerged as major net buyers.

Technical view After rebounding from a low at 1,545.7 (Jan 17) to 1,590.8 (Jan 22), KLCI ended lower for a 2nd session to 1,573.7, slipping back below the downtrend channel. For further upside, the benchmark must break above the upper trendline near 1,589 to advance toward 1,600, 1,613 (200D MA) and 1,625 (38.2% FR) levels. Failure to do so could trigger more downside at 1,566 (76.4% FR), 1,545 and 1,529 (Aug 5 low) levels. 

Outlook Ahead of the CNY holidays, KLCI is likely to extend its consolidation this week (support: 1,545-1,566; resistance: 1,589-1,600), as investors will continue to assess: (i) Trump 2.0 policies; (ii) China’s economic challenges; (iii) continued foreign exodus, and (iv) upcoming major central bank decisions, notably from ECB and FOMC (Jan 30). 

Following recent bullish LT downtrend line breakout, FOCUSP (Buy, TP: RM1.14) is attractive to bargain for recovery upside. A convincing crossover above RM0.86 (1M high) will spur greater upside towards RM0.92 (61.8% FR) and RM0.98 (76.4% FR) zones. Key retracement support levels are pegged at RM0.81 (mid BB), RM0.79 (200D MA) and RM0.78 (23.6% FR).

Source: Hong Leong Investment Bank Research - 27 Jan 2025