The FBM KLCI could remain under pressure after falling to a fresh year-to-date low, as elevated global bond yields, high oil prices and continued foreign fund outflows keep investors in a risk-off mode, according to Hong Leong Investment Bank (HLIB) Research.
The benchmark index tumbled 26 points, or 1.56%, to 1,644 on Sept 29, breaking below its previous 2026 low of 1,655 recorded on June 29.
HLIB said the decline reinforced a bearish technical setup, with the KLCI trading below key moving averages and its long-term rising trendline.
Selling was broad-based, with 22 KLCI constituents declining against just four gainers. CIMB, Maybank, Public Bank, RHB Bank, Petronas Chemicals and Tenaga Nasional were among the major drags.
Foreign institutions remained net sellers for a fifth consecutive trading day, recording a RM172 million net outflow. Foreign selling totalled RM786 million over five trading days, bringing month-to-date outflows to RM1.46 billion and year-to-date outflows to RM5.92 billion.
Local institutions also recorded a marginal RM6 million net outflow for the day, while retail investors emerged as the main buyers with RM178 million in net purchases.
HLIB said a near-term technical rebound could not be ruled out after the KLCI dropped about 109 points, or 6.2%, from its four-month high of 1,753.
However, any rebound is expected to encounter resistance around 1,655, followed by 1,680 and the 200-day moving average near 1,704.
On the downside, continued weakness could expose the index to the next support levels at 1,624 and 1,600.
HLIB said persistent global uncertainties, elevated oil prices, high bond yields and continued foreign selling could prolong the domestic market’s consolidation.
Global markets remained cautious as US Treasury yields stayed near multi-year highs. The US 10-year Treasury yield briefly reached 5.30%, its highest level since 2007, before easing to around 5.24%.
Wall Street finished modestly lower, with the Dow Jones Industrial Average down 0.26%, the S&P 500 slipping 0.16% and the Nasdaq Composite declining 0.09%.
Meanwhile, Brent crude eased about 2.5% to around US$102 per barrel after recently trading as high as US$106, although energy-market volatility remained elevated.
HLIB said investors would continue monitoring US inflation and labour-market data for further signals on the Federal Reserve’s policy direction.
Domestically, the research house said expectations for slower economic growth in 2027, potential corporate earnings disappointments and household affordability pressures could also weigh on investor sentiment.
