FBM KLCI

• The FBM KLCI rose 1.08% (or 17.26 points) to close at 1,621.24 last week, supported by gains in Technology (+4.9%), Construction (+3.0%), and Plantation (+2.3%), partially offset by declines in REIT (-0.9%), Consumer Products & Services (- 0.7%), and Telecommunications & Media (-0.7%). The strong tech sector performance reflects market optimism about potential benefits from trade diversion following Trump's victory, along with improved sentiment from the recent strengthening of the USD against the MYR (from RM4.12 in early October to RM4.38 last Friday). Additionally, benchmark CPO futures rose for the third consecutive week, closing above RM5,100 per tonne due to anticipated tight supply and rising demand.
• Looking ahead, with Trump's return to the White House, global equity markets, particularly in Asia, are preparing for potential policy shifts and increased volatility. While Malaysia's markets may benefit from certain economic dynamics, they also face uncertainties influenced by potential policy changes. Key events this week include the U.S. October Consumer Price Index release on Wednesday and the Producer Price Index on Thursday. Locally, attention is on Malaysia's 3Q GDP data, scheduled for release on Friday, with market expectations of a 5.3% YoY, down from 5.9% in 2Q.
• Technically, the benchmark index rebounded last week, closing slightly above its key 13-week SMA at 1,617, suggesting the market may be attempting to establish a consolidation base. An 'inverted hammer' candlestick pattern on the weekly chart signals a potential trend reversal, though the weekly stochastic and RSI indicators have retraced to more moderate levels following recent declines.
• All in, we anticipate consolidation with a downside bias this week, impacted by a weaker MYR against the USD and repositioning of certain foreign investments post-Trump's victory. Key support levels are at 1,617, followed by the psychological level of 1,600. On the upside, resistance levels are at 1,628 (aligned with the 5-week SMA) and 1,645 (50-day SMA).

Source: Kenanga Research - 11 Nov 2024