The Malaysia stock market headed south again on Thursday, one session after ending the two-day slide in which it had fallen almost 10 points or 0.7 percent. The Kuala Lumpur Composite Index now sits just above the 1,460-point plateau and it’s likely to be rangebound again on Friday.
At 9.19am, the FBM KLCI opened at 1459.03.
Malacca Securities (MSSB) said the FBMKLCI (-0.04%) ended marginally lower in line with weaker sentiments on regional markets.
Meanwhile, on the broader market, heavy profit-taking were noticed in the Construction sector.
The leading sector was the Healthcare sector (+1.47%) as glove counters had a strong rebound.
Overall sentiment on the Bursa exchange was slightly weaker and the FBM KLCI ended flat for the session as profit taking activities emerged, in line with the regional benchmark. Meanwhile, we expect the negative performance from Wall Street may spillover to stocks on the local front.
Given the 2 Johor by-election will be held this weekend, traders may take a cautious stance and continue with the profit taking activities within the construction sector at least for the near term, while shifting their focus on stocks within the defensive or value stocks.
Commodities wise, the Brent crude oil traded slightly below the USD90/bbl level, while the CPO prices continued to consolidate below the RM3,800/MT level.
Sector focus: Given the sell down on Wall Street, we believe some of the technology sector on the local front may be affected. Meanwhile, we still like the O&G sector amid firm Brent oil prices. Besides, MSSB thinks traders may lookout for value and defensive counters such as glove and REIT under this environment. MSSB thinks investors will assess the recent quarterly results to position themselves for solid fundamental companies into 4Q23.
The FBMKLCI traded flat after a significant rebound move two days ago. The technical readings on the key index are mixed with the MACD Histogram forming a rounding top formation, but the RSI is still hovering above 50. The resistance is located around 1,465-1,470, while the support is set around 1,430-1,440.
CGSCIMB said the local benchmark FBMKLCI (KLCI) was little changed at 1,460.07. The broader market was dragged by construction (-2.00%), transportation (-1.38%) and utilities (- 0.80%). The only gainers were healthcare (+1.47%), plantation (+0.58%) and REIT (+0.09%).
Trading volume dropped sharply to 3.21bn (down from 4.18bn on Wednesday) while trading value eased further to RM2.02bn (down from RM2.13bn previously). Market breadth turned negative as 386 gainers underperformed 535 losers.
The benchmark continued to move sideways as we expected. Prices remained above the downtrend line from the 1,527 highs as well as the 20-day EMA, underpin a short-term positive. For now, CGSCIMB expects the upside to remain capped at 1,465 before the index attempts another breakout move above the said level.
However, if the bulls were to give us a surprise and push prices above 1,465, then the index may continue on its climb towards 1,476-1,485 next. Any close below 1,452 warns that the benchmark may be heading into another consolidation phase – either continue to chop sideways or endure a deeper correction.
The rising 50-day EMA, together with the 1,430-1,438 band remains the key support in the near term. CGSCIMB’s portfolio stays in risk-on mode this week.
RHB Retail Research, said today (Sept 8) that the FKLI successfully defended the 200-day SMA line, recovering all intraday losses to close in positive territory and settling 1.50 pts higher at 1,440.50 pts.
It started the day lower at 1,438 pts, only to experience a sharp drop to a low of 1,421.50 pts,. However, it then rebounded strongly to reach a high of 1,445 pts before the closing.
The presence of a bullish candlestick with a long lower shadow underscores the robust bullish momentum above the 50-day and 200-day SMA lines, indicating a positive rebound in the upcoming sessions.
In the medium term, the bearish bias still prevails as the index has yet to form a “higher high” bullish pattern. Despite the RSI improving to reach the 50% level, the upcoming rebound may not be excessively strong yet.
Unless there is a notable acceleration in momentum that breaches the stop-loss level, RHB’s bearish bias remains unchanged.
RHB recommends traders to retain the short positions initiated at 1,447.50 pts, or 17 Aug’s close. To mitigate the trading risks, the stop-loss threshold is set at 1,468.50 pts.
The first support remains unchanged at 1,430 pts, followed by 1,400 pts. Towards the upside, the nearest resistance is pegged at 1,450 pts, followed by 1,468.50 pts, which was the high of 1 Aug.
