Rebound continues with key barriers at 1,600-1,612 ahead of major central bank meetings and CNY holidays next week 

Technical Pick-TEOSENG

KLCI: 1587.8 (7.3)
DOW: 44156.73 (130.9)
MSCI Asia: 181.45 (0.2)
FCPO (RM): 4181 (-27)
BRENT (USD): 79 (-0.29)
USDMYR: 4.437 (-0.039)
SGDMYR: 3.2797 (-0.012)
EURMYR: 4.6352 (0.002)
AUDMYR: 2.7874 (-0.002)
GBPMYR: 5.484 (0.002)
US: 10-yr yield (%) 4.6109 (0.035)
BNM:10-yr yield (%) 3.783 (-0.005)

Asia/US. Tracking a rally in Wall St, Asian markets ended higher with tech shares leading the gains after Trump announced a JV dubbed “Stargate”, with OpenAI, ORCL and Softbank to invest USD500bn to build critical AI infrastructure in the US. However, sentiment remained cautious in anticipation of a potential rate hike at the BOJ meeting on Jan 24, and Trump’s threat to impose a 10% tariff on Chinese imports as soon as Feb 1. 

The Dow jumped 131 pts to 44,156, spurred by upbeat results from NFLX and P&G, coupled with the spike in AI-related stocks after Trump unveiled the Stargate project. Sentiment was also buoyed by expectations of a strong 4Q24 results season (+12% YoY, the best since 4Q21) and optimism that Trump’s stance on global trades and tariffs won’t be as harsh as feared. This week, attention turns to a busy earnings season with reports from JNJ, GE, TXN, AXP and VZ, while key economic data include S&P Global PMIs and existing home sales. 

Malaysia. KLCI rebounded for a 4th straight day, from a 5-mth low at 1,545.7 to end at 1,587.8. However, profit taking saw market breadth fell to 1.01 from 1.79 previously while daily volume shrank 13.4% to 2.97bn shares valued at RM2.24bn. Foreign net selling continued for the 15th day in Jan (-RM70m, Jan: -RM2.16bn, 2024: -RM4.2bn) while local institutions (+RM43m, Jan: +RM1.47bn, 2024: -RM9.95bn) alongside local retailers (+RM27m, Jan: +RM688m, 2024: -RM5.74bn) were major net buyers.

Technical view From a 3M high of 1,644.5 (Dec 31), KLCI tumbled to a low at 1,545.7 (Jan 17) before staging a relief rally to end at 1,587.8 yesterday. Following the piercing pattern on Jan 17, KLCI is poised for a downtrend reversal, challenging 1,589 (61.8% FR), 1,600, 1,612 (200D MA) and 1,625 (38.2% FR) levels. On the contrary, a decisive breakdown below 1,545-1,566 (76.4% FR) could trigger a slide towards 1,529 (Aug 5 low) and 1,500 levels. 

Outlook The technical rebound over the last four days may continue this week towards 1,600-1,612-1,625 (support: 1,545-1,566) levels. Nevertheless, gains could be capped ahead of the CNY holidays next week as investors will continue to assess: (i) Trump 2.0 policies; (ii) China’s economic challenges; (iii) continued foreign exodus, and (iv) upcoming major central bank decisions, notably from the BOJ (Jan 24), ECB and FOMC (Jan 30). 

Technically, TEOSENG (CP: RM1.03, trailing P/E: 3.5x) is attractive to bargain for recovery upside towards the RM1.07 (50% FR), RM1.12 (50D MA) and RM1.20 (23.6% FR) zones, in anticipation of a downtrend channel breakout. Key retracement support levels are pegged at RM0.99 (Jan 13 low), RM0.975 (lower BB) and RM0.93 (76.4% FR).

Source: Hong Leong Investment Bank Research - 23 Jan 2025