Uptrend persists barring a decisive breakdown below 1,638-1,647 supports

Technical pick: SAMAIDEN

KLCI: 1665.3 (-3.5)
DOW: 42124.65 (61.3)
MSCI Asia: 187.2 (0.7)
FCPO (RM): 4015 (38)
BRENT (USD): 73.9 (-0.59)
USDMYR: 4.203 (-0.001)
SGDMYR: 3.2524 (-0.001)
EURMYR: 4.6679 (-0.024)
AUDMYR: 2.8654 (0.004)
GBPMYR: 5.5847 (-0.004)
US: 10-yr yield (%) 3.7489 (0.008)
BNM:10-yr yield (%) 3.73 (-0.008)

Asia/US. Asian markets ended mostly higher amid persistent optimism from the Fed’s outsized cut last week. Sentiment was also boosted by the PBOC’s cut in its 14D reverse repo rate to 1.85% from 1.95% to help boost an anaemic economic growth. The Dow closed at fresh record high (+61 pts to 42,124), fuelled by Fed officials’ comments of endorsing last week’s jumbo size cut and further supported for more policy easing in the upcoming meetings. However, concerns over economic growth remain, as the US manufacturing PMI data hit a 15M low while US Services PMI mildly beat expectations. Further key focus this week will be on durable goods orders and Powell’s speech (Sep 26) coupled with personal spending, personal income, and PCE deflator (Sep 29).

Malaysia. Bucking higher Wall St and regional markets, KLCI slipped 3.5 pts at 1,665.3, driven by mild profit-taking from foreign investors following six consecutive weeks of net buying. Market breadth was negative at 0.68 vs 1.56 last Friday while daily volume fell 19.8% to 3.36bn shares valued at RM3.17bn (+46%). Foreign institutions emerged as major net sellers (-RM119m, Sep: +RM1.17bn, YTD: +RM4.21bn) while local retailers (+RM52m, Sep: -RM317m, YTD: -RM5.12bn) and local institutions (+RM67m, Sep: -RM852m, YTD: +RM914m) were notable net buyers.

Outlook Fuelled by positive sentiment surrounding the Fed’s pivot and the narrative of a US soft landing, along with the strength of the RM and the upcoming Invest Malaysia event on Sep 26, the KLCI is poised to sustain its uptrend towards short-term resistance levels at 1,684 to 1,700 (support: 1,638-1,647-1,660). However, further rally will depend on insights from the upcoming Budget 2025 (to be tabled on Oct 18), as well as additional details regarding the Johor-Singapore Special Economic Zone (JS-SEZ), expected to be finalized by the end of Nov. 

Technically, SAMAIDEN is grossly oversold after tumbling 23.2% from YTD high RM1.42, with downside risks well-cushioned at RM1.00-1.07 range. On the upside, the stock needs to overcome RM1.14 (downtrend line) resistance to enhance recovery potential towards the RM1.21 (50%FR) and RM1.26 (61.8%FR) territory. 
 

Source: Hong Leong Investment Bank Research - 24 Sept 2024