Market Review

MY: The local bourse ended lower as losses in PCHEM and CIMB dragged the FBMKLCI into negative territory. Market breadth was also negative, with 567 losers outpacing 442 gainers. Sector-wise, Health Care (+0.93%) outperformed, led by KPJ and IHH, while Industrial Products & Services (-0.92%) was the biggest laggard.

US: Wall Street fell on Thursday as Alphabet’s 12.6% plunge weighed on major indices and renewed concerns over returns on AI spending. The Nasdaq fell 1.4%, while the S&P 500 and Dow each declined 0.3%. However, broader market breadth remained positive, suggesting rotation away from technology heavyweights.

The Day Ahead

US: Following Alphabet’s sharp sell-off and Amazon’s after-hours decline on softer-than-expected 4Q26 sales guidance, we believe Wall Street could face further selling pressure on Friday, despite annualised 3Q26 GDP growth of 3.4%. Stock-wise, we favour TSMC (TSM) for its leading position in advanced semiconductor manufacturing and packaging. Reported potential CoWoS price increases of up to 20%, if implemented, could support margins. Meanwhile, investors seeking defence exposure could consider RTX (RTX), supported by a record USD340bn backlog and raised FY26 adjusted EPS guidance of USD7.65–7.75. Lastly, Sandisk’s (SNDK) stronger-than-expected results and above-consensus guidance point to continued strength in AI-related storage demand.

MY: Tracking the sell-off in US technology stocks, we expect negative spillover to weigh on local sentiment, particularly in the Technology sector. Stock-wise, we favour GASMSIA, supported by (i) potential cogeneration opportunities as data centre operators explore off-grid power supply, (ii) longer-term gas sales opportunities from potential liberalisation of gas supply to the power sector and more than 8GW of indicative new gas-fired capacity by 2031, and (iii) prospects for earnings recovery as natural gas prices improve. Lastly, we issued our non-rated IPO note today on MYDCD (M+ fair value= RM1.07), a provider of mechanical, electrical, plumbing and fire protection (MEPF) systems for critical infrastructure.