FBM KLCI (Neutral)

• After decisively surpassing the 1,500 resistance level in late January, the FBM KLCI pulled back slightly last week, closing 4.3 points or 0.28% lower at 1,512.28. Market activity slowed in anticipation of the Lunar New Year, with trading volume dropping to 14.5b shares worth RM9.5b from the previous week's 15.4b shares worth RM11.5b.

• This week, the local benchmark index is anticipated to stay subdued post Chinese New Year, with eyes on significant US economic updates and Malaysia's 4Q GDP announcement. Key events include the US CPI report due Tuesday, Retail Sales, and Consumer Sentiment index releases later in the week. Domestically, Malaysia's 4QCY23 GDP, set for release on Friday, is in focus, with the Malaysian Institute of Economic Research projecting a modest quarterly growth of 3.6%, contributing to an overall 3.9% growth for year 2023 despite challenges from weak external demand and the MYR depreciation.

• Technically, despite a slight pullback last week, the FBM KLCI's bullish long-term outlook remains positive. Maintaining a position above the pivotal 1,508 level, or its 200-week Simple Moving Average (SMA), supports a bright long-term outlook. This optimism is bolstered by the index breaking out from its triangle pattern and staying above the long-term downtrend line that has been in place since 2018.

• All in, barring any unforeseen hotter US economic data surprise, we anticipate the index will move sideways this week. Key resistance levels are identified at 1,521 and 1,527, with crucial support at 1,508, aligning with its 200-week SMA, and additional support at 1,500.

Source: Kenanga Research - 13 Feb 2024