Steady Start Seen For Bursa Malaysia

Bursa Malaysia has ticked lower in two straight sessions, slipping more than 6 points or 0.4 percent along the way.

The Kuala Lumpur Composite Index now sits just above the 1,610-point plateau although it’s likely to find mild support on Wednesday. 

At 9.16am, the FBMKLCi rose +5.14 points to open at 1,616.63.

RHB Retail Research (RHB) in a note today (June 12) said the FKLI extended its correction during Tuesday’s session, declining 0.50 pts to close lower at 1,611 pts. Yesterday, the index opened at 1,613 pts.

After touching the 1,617.50 pts intraday high, it fell to 1,608 pts and closed at 1,611 pts.

The latest “lower low” closing suggests the correction is still in progress.

For the immediate sessions, the index may pull back towards the 1,600-pt support level.

Expect the bulls to stage a rebound near the immediate support.

In the event the immediate support is breached, this will open the door for further correction.

As long as the index stays above the 1,600-pt mark, they will keep the positive trading bias.

They recommended traders to hold on the long positions initiated at 1,455 pts (the close of 3 Nov 2023).

To minimise the trading risks, the trailing-stop threshold is fixed at 1,600 pts.

The immediate support is marked at 1,600 pts, followed by 1,575 pts.

Meanwhile, the immediate resistance is pegged at 1,637 pts – 20 May’s high – followed by 1,650 pts.

Malacca Securities (MSSB) said the FBMKLCI (-0.18%) ended lower as the index was dragged by selling pressure in selected industrial and consumer products heavyweights, while the sentiment is weak while investors await the 2-day FOMC to gauge the future interest rate direction.

Meanwhile, the Construction sector (+4.29%) was the leading sector.

The Day Ahead
Despite the FBMKLCI closing in the negative territory, most of the buying interest was focusing within the FBM70 and FBM Small Cap stocks revolving around the Property and Construction players, in tandem with the rising data center demand.

Meanwhile, the US stock markets ended mixed, but the S&P500 and Nasdaq closed at record highs, respectively, with the boost from Apple after the WWDC conference.

In the near term, we expect traders to take a cautious view ahead of the conclusion of the 2-day FOMC meeting, as it may dictate the interest rate direction going forward.

At this juncture, it is widely anticipated that the Fed will keep the interest rate unchanged.

On the commodity markets, Brent oil continued to rebound above USD82/bbl, while the FCPO slid below the RM4,000 level.

Sectors focus: Still, we are positive on the Technology sector driven by the rising demand on data center investments recently into Malaysia, while AI and cloud services may bode well for specific segments such as HDD.

Also, with several Property players announcing land sale to data center providers and MNCs, they opined that the further upward re-rating of property players may stay for the near term as their land bank will be revalued higher for now.

Other sectors that may benefit include the Construction, Building Material, Utilities and RE.

Bloomberg FBMKLCI Technical Outlook
The FBMKLCI index traded below the 1,615 level.

The technical readings on the key index were positive with the MACD Histogram forming a rounding bottom formation, 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) Asian stock markets ended Tuesday lower, led by Chinese and Australian stocks.

The local benchmark FBMKLCI (KLCI) eased 2.88pts or 0.18% to end the day at 1,611.49. Sector-wise, it was a mixed bag yesterday with construction (4.29%) leading the charge followed by technology (+2.37%) and property (+1.41%).

On the flip side, transportation (-1.00%), plantation (-0.73%) and utilities(-0.70%) were the top laggards.

Trading volume surged to 6.98bn (up from 5.96bn on Monday) while trading value climbed to RM5.12bn (up from RM3.30bn previously).

Market breadth stayed positive for the third day running as 797 gainers beat 496 decliners.

The benchmark formed its second black candle as the index continues on its consolidation.

They reckoned that the index may stay rangebound in the near term with support seen at 1,590-1,600 levels.

The rising 20-day EMA (currently at 1,608) is likely to act as support as well.

The index needs to overcome and close above 1,622 to confirm the swing up to retest of the 52-week high at 1,632 and beyond.

The immediate resistance at 1,620-1,625 is a long-term resistance and is likely to take some time before the bulls can muster the strength to breakout.

Their portfolio stays in risk-on mode this week.

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