KLCI: 1606.85 (-1.9)
DOW: 43717 (-110)
FCPO (RM): 4758 (-146)
BRENT (USD): 73.9 (-0.59)
USDMYR: 4.4525 (+0.005)
SGDMYR: 3.3008 (+0.001)
EURMYR: 4.6692 (-0.003)
GBPMYR: 5.6273 (+0.002)
US: 10-yr yield (%) 4.40 (-0.0)
BNM:10-yr yield (%) 3.81 (+0.0)
Asia/US. Asian markets wavered ahead of key central bank decisions this week (Fed on Dec 18, BOJ on Dec 19, and PBOC on Dec 20), as investors assessed mixed economic data from China, including stronger industrial production, weaker retail sales, and easing declines in new home prices for the third month.
Ahead of the FOMC decision, the Dow fell for the 8th straight day (-111 pts to 43,717), dragged down by UNH (-4.2%) amid growing scrutiny and legislative pressures following the passing of its insurance unit CEO. In contrast, the Nasdaq (+247 pts to 20,173) scored another record closing, spurred by TSLA (+6%), AVGO (+11.2%) and AAPL (+1.7%) amid expectations of a 25-bps cut, despite concerns that slowing disinflation trends could limit the Fed's scope for more aggressive cuts in 2025. Other significant data releases this week include PCE inflation; S&P Global’s manufacturing and services PMIs and the final 3Q24 GDP data.
Malaysia. In wake of persistent foreign net outflows and lack of fresh local catalysts, KLCI eased 1.9 pts to 1,606.9, marking its 6th decline in 7 days. Market breadth was negative at 0.65 vs 1.25 last Friday, with trading volume rose to 3.16bn shares (vs Dec avg: 3.07b) valued at RM2.45bn (Dec avg: RM2.67bn). Foreign institutions emerged as the net sellers for the 19th day (-RM176m, Dec: -RM1.82bn, YTD: -RM3.14bn) whilst local institutions (+RM173m, Dec: +RM2.23bn, YTD: +RM8.49bn) alongside local retailers (+RM3m, Dec: -RM409m, YTD: -RM5.35bn) emerged as major net buyers.
Outlook Ahead of the FOMC and key central bank decisions this week, KLCI could trend sideways (support: 1,586-1,600 levels) amid persistent foreign net outflows. Nevertheless, we remain optimistic of a potential breakout above the immediate downtrend resistance near 1,615, which could propel KLCI towards 1,625-1,640-1,648 levels, supported by the potential “window dressing” effect in Dec. Historically, this seasonality has had a 90% success rate over the past 10-20 years, with positive returns ranging from 1.5%-1.8%.
Technically, after falling 17.6% following the H&S pattern from all-time high at RM1.31 (Oct 22) to RM1.08 yesterday, TEOSENG (Not-rated, FY25F P/E: 5.9x, FY25F DY: 4.6%) could find a sound support near RM1.00-1.04 levels (aligns with the downside target of the H&S) before an imminent recovery. A confirmed breakout above RM1.13 (38.2% FR) may spur upside towards RM1.21 (23.6% FR) and RM1.31 region.
Source: Hong Leong Investment Bank Research - 17 Dec 2024
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