FBM KLCI

• The FBM KLCI closed higher last week to 1,668.85 (+1.01% WoW), buoyed by a stronger MYR as investors capitalized on momentum following the US Fed's significant rate cut. Most sectors posted positive weekly performances, led by Health Care (+9.7%), Construction (+6.3%), and Property (+4.6%), while the Plantation index was the only sector to record a slight loss of -0.1%, WoW. Weekly turnover increased to 16.5b units valued at RM18.9b, up from 12.0b units valued at RM13.9b the previous week. Notably, daily market volume resumed its upward trend over the last two trading days, surpassing 4b units compared to the previous 5-day average of 2.8b units.
• Looking ahead, market focus this week will be on the Invest Malaysia-Iskandar conference on Thursday, where PM Anwar will deliver the keynote address. Recently announced tax breaks and incentives for Forest City are expected to attract investments and boost economic growth in the region. Additionally, a 0% tax rate for family offices and a special 5% tax rate for fintech and foreign payment system operators are likely to draw in businesses, financial institutions, and high-net-worth individuals in the short to medium-term. Overall, we expect the positive momentum to continue this week, albeit to a lesser degree, supported by a stronger MYR and sustained foreign inflows. However, the potential of a looming U.S. government shutdown tied to the CY25 Federal budget (due at the end of September) could influence global market direction.
• Technically, the FBM KLCI rebounded and remains above its 5- and 13-week SMAs, indicating that both short- and medium-term uptrends are intact. However, we expect the index to close the three-point gap (1,665-1,668 levels) and possibly retreat to as low as 1,660, aligning with the 5-day SMA, before resuming its upward trend.
• In summary, we anticipate the market to consolidate with an upward bias this week. Key support levels are at 1,660, followed by 1,643, in line with the 5-week SMA. On the upside, resistance levels are at the recent high of 1,684, followed by 1,695.

Source: Kenanga Research - 23 Sept 2024