Building base near 1,600-1,625 ahead of the Budget 2025 amid external headwinds 

Technical pick: HIAPTEK

KLCI: 1635.62 (0.3)
DOW: 42080.37 (126.1)
MSCI Asia: 191.99 (-4.6)
FCPO (RM): 4219 (-52)
BRENT (USD): 77.18 (-3.75)
USDMYR: 4.2873 (0.003)
SGDMYR: 3.2895 (0.004)
EURMYR: 4.7106 (0.015)
AUDMYR: 2.8838 (-0.024)
GBPMYR: 5.6139 (0.014)
US: 10-yr yield (%) 4.0119 (-0.014)
BNM:10-yr yield (%) 3.766 (0.005)

Asia/US. Mirroring a sluggish Wall St overnight and a 9.4% slump in HSI, Asian bourses ended largely lower as investors reassessed the path of Fed’s pivot, heightened Middle East conflict and China’s massive stimulus measures. Meanwhile, SHCOMP surged as much as 10% in early trades before paring its gains to 4.6% at 3,489.8 after coming back from Golden Week holidays, as investors were disappointed amid the lack of more major stimulus from a key policy meeting. Ahead of the upcoming inflation data and the start of 3Q24 earnings season this week, the Dow recouped some of the previous session's losses (+126 pts to 42,080), buoyed by bargain hunting on mega tech stocks and easing oil prices. Meanwhile, markets are still pricing in a modest 25 bps cut on Nov 7 meeting as most Fed officials commented rate cuts should be data-based, focusing on maintaining labour market strength amid easing inflation expectations. 

Malaysia. In line with the mixed regional markets, KLCI ended flat (+0.3-pt to 1,635.6) after falling as much as 6.1 pts. Market breadth inched up to 1.17 vs 1.15 previously while daily volume rose 17% to 3.25bn shares valued at RM2.67bn. Foreign institutions emerged as net buyers after net selling for the 11 days (+RM44m, Oct: -RM951m, YTD: +RM2.3bn) alongside local retailers (+RM4m, Oct: +RM21m, YTD: -RM4.84bn) while local institutions (-RM48m, Oct: +RM930m, YTD: +RM2.24bn) emerged as major net sellers.

Outlook Ahead of the tabling of Budget 2025 on Oct 18, KLCI is expected to remain choppy (support: 1,606-1,625; resistance: 1,638-1,657), as investors weigh continued net outflows by foreigners amid portfolio rebalancing and rotation of funds (-RM1.7bn over the past 12 days) potentially towards high-flying China & Hong Kong equities, surging geopolitical tensions in the Middle East, and the political dynamics during the US elections countdown (Nov 5).

Technically, after sliding 45% from 52W high at RM0.51 (Jul 11) to a 52W low of RM0.28 (Sep 11), HIAPTEK is poised to stage a breakout above the downtrend line soon about rebounding strongly above multiple key MAs. A decisive cross above RM0.40 psychological hurdle (50% FR) may suggest further upside towards RM0.425 (61.8% FR) and RM0.46 (76.4% FR) levels.
 

Source: Hong Leong Investment Bank Research - 9 Oct 2024