Bursa Malaysia Run Out Of Steam On Monday

Bursa Malaysia has moved higher in two straight sessions, adding almost 15 points or 1 percent in that span.

The Kuala Lumpur Composite Index now sits just above the 1,615-point plateau although the rally may stall on Monday.

RHB Retail Research in a note today (May 20) said the FKLI is set to propel higher after resuming its uptrend last Friday, climbing 10.50 pts to close at 1,619 pts and heading towards the 1,650-pt level.

It opened at 1,608.50 pts and rose strongly throughout the session, testing an intraday high of 1,621 pts near the close.

This latest bullish session indicates the recent consolidation has ended, setting the stage for a continued uptrend towards 1,650 pts.

Note: The upcoming 1,620-pt level marks a 3-year high. Surpassing this would see the FKLI trade at a fresh 3-year high.

The latest “higher high” bullish pattern also solidifies its bullish momentum above the 1,600-pt level.

Nevertheless, short-term profit-taking activities may occur, especially when the index reaches 1,650 pts, given that the RSI is now at 72%, which indicates overbought territory.

As the uptrend is strengthening, they maintain their bullish bias.

Malacca Securities (MSSB) said the FBMKLCI (+0.34%) ended higher as investors maintained buying interest after the Malaysian 1Q24 GDP data came in higher-than-expectations suggesting the economy is still on a positive trajectory.

Meanwhile, the Technology sector (+2.54%) rallied amid good quarterly results in selected tech stocks.

The Day Ahead
With Malaysia 1Q24 GDP data came in above expectations, the FBMKLCI, FBM70 and FBM Small Cap registered fresh 52-week highs.

Meanwhile, the US stock markets ended mixed but the Dow charged above the 40k level.

This week, they expect the market will be focusing on (i) Fed officials’ speeches, (ii) unemployment claims and (iii) manufacturing and services PMI data to understand the overall interest rates direction going forward.

On the commodity markets, Brent oil noticed support above USD81 and traded along USD84/bbl, awaiting a decision from OPEC+ to continue its production cuts which will be ending on June, while the gold price rallied near to its all-time-high zone, trading around USD2420.

Sectors focus: Overall, the market is still in a bullish tone as the economy continued to grow in 1Q24. Also, they expect the US imposed higher tariff on China products will benefit Malaysia companies potentially due to higher trade diversions going forward.

They strongly believe the Technology, EMS, Metal-related sectors will gain momentum in the near to mid-term. Also, they think there could be further trading potential in the

Construction, Building Materials and Property sectors with the potential revival of mega infrastructure projects like KL-SG HSR as well as optimism over the execution of NETR and NIMP master plans.

Bloomberg FBMKLCI Technical Outlook

The FBM KLCI index ended higher, surpassing the 1,615 level. However, the technical readings on the key index were mixed with the MACD Histogram extending a slight negative bar, while the RSI maintains above 50.

The resistance is envisaged around 1,630-1,635 and the support is set at 1,595-1,600.

CGS International (CGS) said Asian stock markets finished mixed on Friday, dragged by the regional chipmakers.

The local benchmark FBMKLCI (KLCI) climbed 5.51pts or 0.34% to end the day at 1,616.62. Week-on-week, the index climbed 15.95pts or 1%.

Technology (+2.54%) continued its winning streak, followed by utilities (+1.45%) and property (+0.92%). The only laggards for the day were plantation (-0.30%), REIT (-0.22%) and energy (-0.09%).

Trading volume increased to 7.23bn (up from 6.05bn on Thursday) while trading value improved to RM4.54bn (up from RM4.35bn previously).

Market breadth turned positive as 846 gainers beat 374 decliners.

The benchmark gapped up last Friday and closed at its multi-year high (since 2021 on a close basis). The uptrend journey is intact with the bulls remaining in a position of strength.

Keep an eye on the next resistance at 1,620-1,625 levels. Subsequent targets are at 1,657-1,660 range if the 1,625 resistance is taken out.

On the downside, KLCI should find its footing near the 1,590-1,601 levels if further weakness sets in. Following support levels are at 1,582 and 1,565. Their portfolio stays in risk-on mode this week.

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