In a research note, the bank noted that the recent surge above the key resistance of 1,640 and reaching a new multi-year high suggest that the FBM KLCI’s bullish trend remains intact.

It said that coupled with the positive slopes of its 20-day and 50-day exponential moving averages (EMA), the upward momentum is likely to persist in the longer run.

“We now anticipate the key support zone at 1,580 to 1,600. On the upside, the immediate resistance level is at the 1,700 psychological mark,” it said.

Nevertheless, AmInvestment Bank also cautioned investors about potential short-term corrections due to a slower-than-expected rollout of domestic infrastructural projects, moderation of domestic consumption, and the likely derating of the oil and gas sector.

“In our view, these downside risks could be partly mitigated by resilient local institutional liquidity as Malaysian equities offer decent corporate earnings prospects, compelling dividend yields of 4%, and low foreign shareholding of 19.6%,” it said.

Meanwhile, AmInvestment Bank noted that the worst-case scenario from a global recession, new pandemic-driven lockdowns, more US rate hike surprises, bank failures, and worsening geopolitical conflicts may translate to an end-2024 FBM KLCI target of 1,340.

“The best-case scenario from a faster pace of US Federal Reserve (Fed) rate cut, stronger domestic government rollout of infrastructural projects, and better-than-expected global economic growth would underpin an end-2024 FBM KLCI target of 1,815,” it added.

Additionally, AmInvestment Bank revised its 2024 year-end forecast for the US dollar against the ringgit to RM4.40 from RM4.63, as the probability of a US rate cut starting this month has become more certain.

“By the end of 2025, our economist is looking at the US dollar against the ringgit to improve further to RM4.20 with the narrowing of interest rate differentials,” said the investment bank.