Volatility Persists But KLCI Is Ripe for An Oversold Rebound Near 1,607-1,625-1,648 Zones 

Technical Pick: TENAGA 

KLCI: 1595.48 (1.2)
DOW: 44782 (-128.7)
MSCI Asia: 185.05 (1.6)
FCPO (RM): 4998 (43)
BRENT (USD): 71.83 (-1.11)
USDMYR: 4.4598 (0.014)
SGDMYR: 3.3133 (-0.005)
EURMYR: 4.6888 (-0.005)
UDMYR: 2.8962 (0.002)
GBPMYR: 5.6651 (0.02)
US: 10-yr yield (%) 4.1897 (0.021)
BNM:10-yr yield (%) 3.755 (-0.012)

Asia/US. Asian markets mostly advanced, led by SHCOMP (+1.1% to 3,364) following a string of positive business activity readings. However, overall gains were tempered by Trump’s 100% tariff threat on BRICS nations if they try to replace USD. Sentiment was also dampened by the US crackdown on China’s semiconductor industry, curbing exports to 140 companies to a trade restriction list. Ahead of the key jobs data (i.e. JOLTS, non-farm payrolls) and Fed’s speeches this week, the Nasdaq (+0.96% to 19,403) and S&P 500 (+0.24% to 6,047) scored record closing highs, boosted by tech-related shares while the Dow slipped 0.29% at 44,782. On Fedspeak, Waller said that he was inclined to cut the Fed rate at the Dec 18 meeting as monetary policy remained restrictive.

Malaysia. KLCI inched up 1.2 pts (off +9.7 pts intraday) to 1,595.5 as investors assessed the mixed Nov results season and persistent exodus by foreign investors coupled with Trump’s 100% tariff threat. On fund flows, foreign institutions emerged as the major net sellers for the 9th straight session (-RM248m, Nov: -RM3.1bn YTD: -RM1.67bn) while local institutions (+RM245m, Nov: +RM3.32bn, YTD: +RM6.51bn) alongside local retailers (+RM3m, Nov: -218m, YTD: -RM4.94bn) were the major net buyers. 

Outlook Given the conclusion of a mixed Nov results season and persistent exodus by foreign investors, KLCI is likely to extend its consolidation. Additionally, geopolitical tensions, Fed’s rate-cuts uncertainty, China’s weak growth, and Trump 2.0’s MAGA policy, may escalate market volatility. Nevertheless, we may anticipate a technical rebound in Dec (resistance: 1,607-1,625-1,648; support: 1,577-1,588) amid a grossly oversold position (-88 pts from 52-week high 1,684), as well as the “window dressing” effect, which has had a 90% hit rate for the past 10/20 years with positive returns of 1.5%/1.8%.  

Technically, TENAGA (BUY, TP: RM15.00) looks attractive to bargain on dips after slipping 11.5% at RM13.48 from 52-week high (RM15.24) for recovery to RM13.95 (150D MA). A successful breakout will lead further rebound towards RM14.30 (50D MA), RM14.63 (daily upper BB) and RM15.00 levels, while key supports are pegged at RM12.70 (June 4 low) and RM13.00 region. 

Source: Hong Leong Investment Bank Research - 3 Dec 2024