FBM KLCI

• The FBM KLCI extended its weekly losses, closing down 30.12 points, or 1.8% to 1,629.97 amid ongoing foreign outflows and escalating Middle East tensions. Most sectors posted negative performances, led by Construction (-3.5%), Telecommunications (-2.8%), and Transportation (-1.8%). In contrast, Energy and REIT were the only sectors to record gains, up 4.2% and 0.6% WoW, respectively. Market turnover increased to 16.9b units worth RM13.5b, compared to 16.6b units worth RM15.18b the previous week. Notably, since 23 September, foreign outflows have amounted to RM1.3b as of 3 October.
• Moving forward, near-term market direction will be influenced by several key factors, including: (i) escalating geopolitical tensions in the Middle East, (ii) developments in the U.S. presidential election, (iii) speculation surrounding the upcoming Budget 2025, (iv) foreign fund flows, and (v) the upcoming 3Q U.S. corporate earnings reports. Additionally, the direction of the MYR could also play a role in shaping market sentiment.
• Technically, the FBM KLCI broke below its key 13-week (1,643) and 50-day (1,639) SMA lines last week, signalling a cautious near-term outlook. Additionally, the weekly stochastic (82.28) and RSI (63.57) indicators have yet to moderate, suggesting that the current consolidation phase is likely to persist.
• We expect the FBM KLCI to stay in a consolidation phase with a downward bias this week. Key support levels are at 1,615, aligned with its 13-week SMA and the upward trend formed since the start of the year, and the psychological level of 1,600. Strong bargain hunting is anticipated if the index approaches the crucial 1,615 support line. On the upside, resistance levels are at 1,639 and 1,643.

Source: Kenanga Research - 7 Oct 2024