Extended Consolidation Amid Persistent Foreign Net Outflows 

Technical Pick: SUNWAY

KLCI: 1602.08 (-1.1)
DOW: 43914.12 (-234.4)
MSCI Asia: 187.53 (1.3)
FCPO (RM): 4919 (-2)
BRENT (USD): 73.41 (-0.11)
USDMYR: 4.4373 (0.005)
SGDMYR: 3.3033 (0.007)
EURMYR: 4.6636 (0.009)
AUDMYR: 2.847 (0.033)
GBPMYR: 5.6625 (0.019)
US: 10-yr yield (%) 4.3278 (0.057)
BNM:10-yr yield (%) 3.78 (0.023)

Asia/US. Asian markets ended mostly higher, taking cues from a benign US CPI print that will fuel hopes of a 25bps cut on Dec 18 meeting. Sentiment was also lifted by expectations of additional stimulus measures from Beijing at the closed-door CEWC. The Dow lost 234 pts to 43,914, marking its 6th consecutive decline, as traders weighed a higher than expected PPI, underscoring slow progress toward the Fed’s 2% inflation target. While traders still show a consensus over a 25bps cut by the Fed next week, stalling disinflation trend may refrain the Fed from adopting a more aggressive cuts in 2025, magnified by tariff hikes and tax cuts measures expected from the Trump 2.0.

Malaysia. Bucking higher regional markets, KLCI eased 1.1 pts to 1,602.1 to record its 5th consecutive loss, dampened by relentless foreign exodus. Foreign institutions remained the dominant net sellers for the 17th day (-RM351m, Dec: -RM1.60bn, YTD: -RM2.92bn) alongside local retailers (-RM1m, Dec: -RM329m, YTD: -RM5.27bn) whilst local institutions (+RM352m, Dec: +RM1.93bn, YTD: +RM8.12bn) emerged as the major net buyers for the 17th straight session.

Outlook Ahead of the FOMC decision on Dec 18 and pending further details from China’s fresh stimulus, KLCI could extend its sideways consolidation, with major supports pegged at 1,586-1,600 levels amid persistent foreign net outflows. On the flip side, a successful breakout above the downtrend resistance at 1,617 may lift further rebound towards 1,625-1,640-1,648 levels, supported by the “window dressing” effect in Dec. Historically, this Dec seasonality has had a 90% success rate over the past 10-20 years, with positive returns of 1.5%-1.8%. 

Technically, after falling 12.7% to RM4.45 (Dec 12 low) from an all-time high of RM5.10 (Nov 25), SUNWAY (BUY, TP: RM5.75) staged a recovery to close at RM4.60 (a tad above 50D MA or RM4.58). Any weakness toward key supports at RM4.34 (100D MA), RM4.45 and RM4.50 levels should attract bargain hunters looking for a ST rebound near RM4.73 (30D MA). A successful breakout will spur more upside towards RM4.83 (20D MA), RM5.00 and 5.10 levels.

Source: Hong Leong Investment Bank Research - 13 Dec 2024