FBM KLCI

• The FBM KLCI extended its decline for the first two trading days of 2025 but managed a slight weekly gain of 0.08% (1.32 points) to close at 1,629.46 last Friday amid mixed regional sentiment and profit-taking after the recent rally. Foreign fund flow turned mildly positive on Monday and Tuesday with a cumulative inflow of RM53m after a prolonged outflow since 20 November 2024, though data for the first two trading days of 2025 was unavailable. Sector-wise, gains in Property, Energy, and Utilities (up over 2%) were partially offset by declines in Health Care (-0.7%) and Technology (-0.6%).
• Moving forward, all eyes will be on Thursday's Forum Ekonomi Malaysia 2025, an annual government event that reviews medium-term progress on initiatives and sets the narrative for the coming year. PM Anwar will deliver a keynote in the morning, followed by the Minister of Economy, who is expected to elaborate on transforming Malaysia from "Made in Malaysia" to "Made by Malaysia" and discuss the Johor-Singapore Special Economic Zone (JS-SEZ). These discussions are anticipated to offer thematic investment insights for the equity market.
• Technically, the FBM KLCI has formed a gravestone doji candlestick pattern on the weekly chart, signalling a potential bearish reversal. The moderation in stochastic and RSI indicators suggests room for further consolidation. On the daily chart, indicators have started retracing from overbought levels, implying that additional consolidation may be expected in the near term.
• In summary, we anticipate profit-taking to persist this week, potentially leading to a 15-20-point dip. Strong bargain-hunting activity is expected near the 5-week SMA (1,614) and 200-day SMA (1,609). Key support levels are 1,614, 1,609, and the psychological 1,600, while resistance levels are 1,644 and 1,649.

Source: Kenanga Research - 6 Jan 2025