Review & Outlook

Since last week's profit-taking correction has significantly weakened technical momentum and trend indicators on the FBM KLCI, further downside bias can be expected this week. The softer-than-expected US jobless data for August released last Friday sparked fresh worries over weaker economic growth in the US, which pressured specifically technology stocks and should spillover to further dampen market sentiment early this week. Nonetheless, weaker selling momentum should restrict downside potential, with the likely presence of bargain hunters on further weakness to provide added support.

Immediate index support remains the recent correction low of 1,633, with 1,620 and 1,600 acting as stronger supports. Key resistance will be the recent high of 1,684, then 1,695, the Dec 2020 high, followed by the 123.6%FP (1,702) and 138.2%FP (1,741) of the 1,369 low to the 1,638 high.

As for stock picks this week, key banking, gaming, telco, and utility heavyweights should attract bargain hunters on further weakness as investors are looking for a longer-term upside potential return to commit to fresh positions.

News Bites

• Prime Minister Datuk Seri Anwar Ibrahim said the government will prioritise strategies to stabilise inflation and address the rising cost of living in Budget 2025.

• Gamuda Bhd said its joint venture to build the Ulu Padas hydroelectric project has been approved by the Sabah energy regulator.

• Varia Bhd has secured a subcontract for flood mitigation works worth RM334.7mn. The contract was awarded to its wholly-owned Pembinaan Teguh Maju Sdn Bhd, by Ikatan Harmoni Sdn Bhd, to build a flood control reservoir in Kota Tinggi, Johor.

• The Malaysian Anti-Corruption Commission confirmed that it has initiated a probe against YTL Communications Sdn Bhd, saying it was based on complaints of alleged graft, embezzlement and power abuse that it had received over the Education Ministry's 1BestariNet project.

• MyEG Services Bhd said it has teamed up with an agency of China's customs in a bid to secure the Royal Malaysian Customs's "single window" project.

• Gadang Holdings Bhd said its subsidiaries have been hit with a civil suit by their subcontractor, claiming an amount of RM9.8mn in alleged outstanding payments for works done related to the Johor BahruSingapore Rapid Transit System Link.

• OSK Holdings Bhd is expanding its cable manufacturing business with the acquisition of Universal Cable (M) Bhd's assets in Johor for RM85mn. OSK's unit, Olympic Cable Company Sdn Bhd, is buying the Universal Cable assets which include its manufacturing plants, land and machinery.

• MISC Bhd has agreed with Netherlands-based floating production storage and offloading operator SBM Holding Inc to exchange ownership interests on two FPSO vessels.

• Duopharma Biotech Bhd has extended its group managing director Leonard Ariff Abdul Shatar's contract for another year until Dec 31, 2025. Leonard Ariff's contract will commence from Dec 9, 2024 until Dec 31, 2025.

• US employment increased less than expected in August, but a drop in the jobless rate to 4.2% suggested an orderly labour market slowdown continued and probably did not warrant a big interest rate cut from the Federal Reserve this month.

• Eurozone officials have signalled that they'll deliver a second reduction in borrowing costs, following up on July's move, which will be scrutinised by investors looking for policymakers' intentions for any further steps later this year.

• UK house prices grew the most since late 2022 as easing borrowing costs boost confidence among prospective homebuyers, data published by the mortgage lender Halifax showed Friday.

Source: TA Research - 9 Sept 2024