Without any significant catalysts, coupled with the softer manufacturing activities in
China, the FBM KLCI closed lower. Similarly, Wall Street started the year on a mixed
note led by Apple Inc following the downgrade from Barclays. We believe the overall
sentiment could be turning negative as 10-year Treasury yields climbed near 4.00%.
Meanwhile, investors could be waiting for the next FOMC meeting (end Jan) to
identify potential rate cut signals going forward. Also, we believe the heightened
geopolitical tension in the Red Sea region may spark downside risk for the markets.
Nevertheless, we still expect buying interest to emerge on the local front with
catalysts such as the potential revival of KL-SG HSR, NETR, NIMP as well as the
launching of PADU systems. On the commodity markets, Brent oil prices ended
around the USD76/bbl level, despite the rising tension in the Red Sea.

Sector focus: We like the overall Utilities sector, especially related to the (i) NETR
blueprint, (ii) potential water tariff revisions and (iii) data centre that consumes high
volumes of water. Hence, we expect water-related stocks to emerge as a growing
segment at least for the 1Q24. Other catalysts such as KL-SG HSR and easing
requirements of MM2H may benefit the Construction, Building Material, and Property
sectors.