Ahead of Monday’s holiday for Agong’s birthday, the Malaysia stock market had moved lower in six straight trading days, sinking almost 35 points or 2.1 percent along the way.
The Kuala Lumpur Composite Index now sits just beneath the 1,600-point plateau although it’s expected to stop the bleeding on Tuesday.
At 9.17am, the FBMKLCi dipped -0.67 points to open at 1,595.94.
RHB Retail Research (RHB) in a note today (June 4) said during May’s final trading session last Friday, the FKLI slid 4.50 pts to close at 1,603 pts – still above the 1,600-pt support and retaining the bullish setup.
The index started trading at 1,607.50 pts, and then whipsawed between 1,614.50 pts and 1,599 pts before it closed at 1,603 pts.
This latest bearish price action suggests that the consolidation remains underway, with the FKLI attempting to form a bullish reversal pattern above the 1,600-pt support. Breaching this immediate support will open the door for downside movements.
Although the momentum is slowing down, we still hold on to the bullish trading bias – unless the 1,600-pt level gives way.
They recommended traders retain the long positions initiated at 1,455 pts or the close of 3 Nov 2023. To minimise the trading risks, the trailing-stop threshold is placed at 1,600 pts.
The immediate support is marked at the abovementioned 1,600 pts and followed by 1,575 pts. Meanwhile, the immediate resistance is pegged at 1,618 pts – the close of 24 May – and followed by 1,637 pts, ie the high of 20 May.
Malacca Securities (MSSB) said the FBMKLCI (-0.47%) ended lower as the key index was dragged by profit taking in the YTL-related counters, amid the weak market sentiment from the poor overnight Wall Street performance.
On a side note, the market turnover was close to RM7bn as general portfolio rebalancing activities were seen to end the month.
The Day Ahead
The FBM KLCI ended lower for the week below the 1,600 psychological level as profit taking activities emerged after digesting most of the corporate earnings.
Meanwhile, the US stock markets closed mixed for the session amid soft manufacturing sector data, where ISM Manufacturing PMI came in below expectations. However, they think Nvidia’s projections are still intact given CEO Jensen Huang revealed that the company’s next generation AI chip platform will be rolling out in 2026.
On the commodity markets, Brent oil violated below USD80 as OPEC+ plans to return output after 3Q. The CPO price has charged higher above the RM4,050 level on the back of stronger demand coming from key buyer China due to its low inventories level.
Sectors focus: Given the Technology sector is trending strongly in the US, we expect buying support to emerge within the stocks on the local front within the Technology segments like the HDD, hardware suppliers and cyber security as the key investment theme will revolve around the data center, AI and cloud services in Malaysia.
Besides, they opined that (i) Construction, (ii) Property, (iii), Building Materials and (iv) Utilities should benefit for the construction of data center going forward.
Based on the latest corporate earnings, traders should focus on NATGATE, MASTEEL and MYCRON.
Bloomberg FBMKLCI Technical Outlook
The FBM KLCI index ended lower for the sixth session, dipping below the 1,600 level. The technical readings on the key index were negative with the MACD Histogram extending another negative bar, while the RSI dropped below 50.
The resistance is envisaged around 1,610-1,615 and the support is set at 1,575-1,580.
Maybank Investment Bank (Maybank IB) said the FBMKLCI Index ended the week on a weaker note last Friday after tumbling on the back of more aggressive profit-taking ahead of the long weekend as the Malaysia stock market was closed yesterday.
The benchmark index fell 7.58pts, or 0.47%, to close at 1,596.68pts, led by declines in GENM, YTL, YTLPOWR and KLK.
Market breadth remained negative, with losers outnumbering gainers by 857 to 365. A total of 5.45b shares valued at MYR6.85b changed hands.
Rising pressure in the technology, plantation, telco, property, utilities and energy sectors continued to weigh on domestic sentiment and is expected to continue in the near term.
Technically, Maybank IB expects the FBMKLCI Index to range between 1,585pts and 1,605pts today, with supports revised to 1,575pts and 1,560pts.
