The FBM KLCI traded lower for the second session as the market sentiment remains
negative as we believe margin calls were activated in most of the counters after
several companies hitting limit-down conditions. For the upcoming session, we
believe the negative sentiment could persist on the fundamentally weak companies,
but bargain hunting activities will be seen in solid companies. Meanwhile, on Wall
Street, the 3 major indexes ended lower following a spike in US Treasury yield after
a stronger-than-expected retail sale report. This has contributed to lower probability
of the Fed cutting its key policy rate in March, down from 66% to 56% based on
Bloomberg. On the commodity markets, the Brent oil price traded marginally higher
around uSD78, despite weak China data.
Sectors focus: With several companies hitting limit-down, we opine that traders will
be focusing on fundamentally solid companies going forward. We expect the
ongoing theme on the KL-SG HSR, coupled with the Johor-region catalysts may be
the winners for 2024, thus trading activities could focus on the Construction,
Property, Building Material as well as the Utilities companies at least for the near
term. Meanwhile, we like the defensive Consumer sector as we think the overall
consumption is stable and growing at this juncture.
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