The FBM KLCI could remain under pressure ahead of the tabling of Budget 2027 as persistent foreign selling, elevated oil prices, high bond yields and renewed geopolitical tensions continue to weigh on market sentiment, according to RHB Research.
The benchmark index fell 10.8 points to 1,601 in the previous session, extending its decline to 11 out of the past 12 trading days.
Market breadth weakened to 0.46 from 0.74, while trading volume slipped to 3.51 billion shares from the five-day average of 4.11 billion shares. Trading value stood at RM3.46 billion.
Foreign institutions extended their net-selling streak to 12 consecutive sessions, disposing of RM195 million worth of Malaysian equities during the day. This brought foreign net selling to RM599 million month-to-date and RM6.75 billion year-to-date.
Local investors continued to absorb the selling, with retailers recording net purchases of RM150 million while local institutions bought RM45 million.
RHB said the KLCI’s technical outlook remains bearish after the index stayed below its 20-, 50- and 100-day moving averages at 1,659, 1,700 and 1,697 respectively.
The research house said the break below the 1,655 to 1,667 support zone, which has now turned into resistance, confirmed the bearish implications of a triple-top formation.
It identified downside targets at 1,578 and 1,568, while immediate resistance is seen at 1,624 followed by the 1,655-1,667 range.
RHB said there were still no clear signs that selling pressure had been exhausted.
Regionally, Asian equities also closed broadly lower, led by Singapore, South Korea, Japan and Hong Kong, as investors reacted to surging oil prices, elevated US Treasury yields and renewed tensions in the Middle East.
Banking heavyweights in Singapore and Malaysia also came under pressure following foreign broker downgrades amid concerns over higher funding costs and bond yields.
Wall Street ended mixed, with the Dow Jones Industrial Average edging up 0.1%, while the S&P 500 fell 0.47% and Nasdaq declined 1.25%, as fresh concerns over the sustainability of AI-related investment triggered selling in technology stocks.
RHB said heightened US-Iran tensions and a hawkish US Federal Reserve narrative could keep Malaysian equities in a risk-off consolidation phase.
Domestically, investors will also be watching Budget 2027, while the planned expansion of the KLCI from 30 to 50 constituents in two phases beginning in December 2026 could contribute to near-term market repositioning.
