Pending a Downtrend Channel Breakout to Advance Further Towards 1,625-1,648 Zones 

Technical Pick: SMRT 

KLCI: 1613.25 (-2.4)
DOW: 44642.52 (-123.2)
MSCI Asia: 186.86 (-0.1)
FCPO (RM): 5128 (-7)
BRENT (USD): 71.12 (-0.97)
USDMYR: 4.4195 (-0.008)
SGDMYR: 3.2969 (-0.004)
EURMYR: 4.6747 (0.013)
AUDMYR: 2.8391 (-0.011)
GBPMYR: 5.6369 (0.005)
US: 10-yr yield (%) 4.1529 (-0.023)
BNM:10-yr yield (%) 3.742 (0.002)

Asia/US. Ahead of the key Nov NF payrolls data, Asian markets ended mixed, dampened by political chaos in South Korea and France. In contrast, SHCOMP jumped 1.05% at 3,404 (3W high) on hopes that Chinese authorities will introduce additional stimulus measures at a key CWEC this week to boost China’s sluggish economy in anticipation of escalating trade tensions with the US. 

The Dow extended its pullback from record highs (-123 pts to 44,642) whilst the S&P 500 (+15 pts to 6,090) and Nasdaq (+159 pts to 19,860) rose to fresh closings after Nov ‘Goldilocks’ jobs data may not deter the Fed from a 25-bps cut (88% probability vs 66% a week ago) on the Dec 18 meeting. Major incoming economic prints on tap are the CPI (Dec 11), PPI (Dec 12) and retail sales (Dec 17), which may provide further guidance on Fed policy.

Malaysia. After jumping 21.4 pts in the last four days, KLCI fell 2.4 pts to 1,613.3 in line with the cautious regional markets. However, market breadth was positive at 1.23 vs 1.00 previously, with 3.18bn shares transacted at RM2.85bn. Foreign institutions emerged as the major net sellers for the 13th consecutive day (-RM144m, WoW: -RM762m, Dec: -RM762m, YTD: -RM2.08bn) alongside local retailers (-RM93m, WoW: -RM299m, Dec: -RM299m, YTD: -RM5.24bn). In contrast, local institutions (+RM237m, WoW: +RM1.06bn, Dec: +RM1.06bn, YTD: +RM7.32bn) were major net buyers for the 13th straight session.

Outlook Ahead of the key US inflation and retail sales prints prior to the FOMC decision and persistent foreign net outflows, KLCI could tread cautiously with major supports pegged at 1,600-1,603 levels. Barring a fall below these supports, the benchmark is poised to break the key 1,620 downtrend resistance to advance towards 1,625-1,640-1,648 levels, supported by the “window dressing” effect in Dec, which has had a 90% hit rate for the past 10/20 years with positive returns of 1.5%/1.8%. 

Technically, with prices now back above the 20D/50D MAs and lower BB, SMRT (CP: RM1.18, BUY, TP: RM2.19) appears to be in a recovery state. A decisive breakout above RM1.21 overhead barrier will boost upside momentum towards RM1.27 (Aug 13 high), RM1.30 (76.4% FR) and RM1.40 (YTD high) levels. Major supports are pegged at RM1.14 (20D MA), RM1.10 (LT support trendline) and RM1.07 (23.6% FR).    

Source: Hong Leong Investment Bank Research - 9 Dec 2024