Rebound may stall at 1,610-1,625 as investors weigh Trump’s tariff pledge, earnings peak and foreign investors’ exodus

Technical Pick: IOIPG

KLCI: 1604.25 (1.1)
DOW: 44722.06 (-138.3)
MSCI Asia: 183.45 (1)
FCPO (RM): 4807 (9)
BRENT (USD): 72.83 (0.02)
USDMYR: 4.4432 (-0.015)
SGDMYR: 3.3085 (0.001)
EURMYR: 4.6727 (-0.012)
AUDMYR: 2.8827 (-0.008)
GBPMYR: 5.6007 (-0.003)
US: 10-yr yield (%)
4.2634 (-0.043)
BNM:10-yr yield (%)
3.798 (-0.008)

Asia/US. Asian markets stalled in early trades as investors evaluated Trump’s tariff pledge and his cabinet selections, which emphasised the "MAGA" agenda. However, sentiment improved in the 2H, boosted by a 1.53% surge in the SHCOMP amid speculation that a key economic meeting in Dec could pave the way for additional stimulus measures. Ahead of the Thanksgiving holiday (Nov 28), the Dow slipped 138 pts to 44,722 after rallying 1,191 pts in five straight session as investors assessed higher core PCE YoY, declining weekly jobless claims and a strong 3Q24 GDP growth at 2.8%, which highlighted both economic resilience and the bumpy progress of disinflation towards the 2% target.

Malaysia. In tandem with the cautious regional markets and extended foreign net outflows, KLCI surrendered an early 6.3-pt hike to end +1.1 pts to 1,604.3 (its 4th consecutive gain) after plunging 96 pts from 52W high at 1,684 to 1,588 (Nov 22). Market breadth improved to 1.23 vs 0.71 previously, with daily volume jumped 26% to 3.19bn shares (Nov avg: 2.88bn) valued at RM2.96bn (Nov avg: RM2.61bn). Foreign institutions intensified the net outflows for the 6th consecutive day (-RM415m, Nov: -RM1.84bn, YTD:-RM58m) alongside local retailers (-RM39m, Nov: -RM307m, YTD: -RM5.03bn) while local institutions (+RM454m, Nov: +RM2.14bn, YTD: +RM5.09n) were the only net buyers.

Outlook Given the final leg of Nov results season and a sharp foreign net outflows (Nov: -RM1.84bn, Oct: -RM1.77bn), KLCI is likely to consolidate in the near term. Additionally, geopolitical tensions, Fed’s rate-cuts uncertainty, China’s weak growth, and Trump 2.0’s MAGA policy, may escalate market volatility and cap further rebound near 1,615-1,625 -1,648 (support: 1,580-1,588) levels.

Technically, IOIPG (FIG#3) may extend its sideways consolidation before trending higher following the formation of Dragonfly Doji pattern yesterday. A successful breakout above key barrier at RM2.20 (200D MA) could spur greater upside towards RM2.26 (61.8% FR), RM2.37 (76.4%) resistances whilst downside is likely to be cushioned at RM1.85-1.95 zones.

Source: Hong Leong Investment Bank Research - 28 Nov 2024