FBM KLCI (Neutral)

• The FBM KLCI concluded last week positively, aligning with global markets buoyed by AI-driven optimism. Despite lackluster excitement from the on-going 4QCY23 corporate earnings, the index rose most of the time last week, finishing up 15.56 points or 1.01% at 1,549.11, solidly above its critical 200-month SMA of 1,548.

• This week, with a scarcity of significant US corporate and economic data, market focus will likely shifts towards local factors. The newly appointed 17th Yang-di-Pertuan Agong's inaugural speech in parliament is scheduled for Monday, capturing national attention. Concurrently, the 4Q earnings season is hitting its stride, with over 500 Bursa Malaysia-listed companies expected to announce their quarterly financial performances. The banking sector, a heavyweight in the benchmark index, is particularly in the spotlight. Major banks are poised to unveil their earnings on Wednesday and Thursday, drawing keen investor interest.

• Technically, the FBM KLCI's long-term bullish outlook is reinforced by its position above the significant 1,510 level, aligning with its 200-week SMA, crucial for maintaining its positive trajectory. Despite expecting increased volatility during the peak of the 4Q earnings season, the 1,510 support level should remain robust.

• All in, market optimism is expected to continue into this week, though volatility may increase, particularly on Wednesday and Thursday, as major banks disclose their earnings. Resistance for the market is identified at 1,555 and 1,570, with significant support at 1,540 (or its 5-day SMA), and further support at 1,527, which signifies the peak of the previous upward trend.

Source: Kenanga Research - 26 Feb 2024