Previous Day Highlights

The FBM KLCI remained in a downtrend for four consecutive days, primarily due to late selling in banking stocks. The benchmark index lost 0.13% or 1.75 points to close at 1,381.26. Losers were led by NESTLE, HLBANK and QL. However, market breadth was positive with 568 advancers against 336 decliners. Total volume stood at 3.60bn shares valued at RM1.94bn.

Major regional markets rebounded after the Congress approved the US debt deal, averting a default. Nikkei 225 surged by 2.20% to close at 32,217.43, reaching its highest point since 1990. STI and HSI added 0.72% and 0.84% to end at 3,189.01 and 19,108.50. Meanwhile, SHCOMP advanced a modest 0.07% to close at 3,232.44.

Wall Street closed lower as economic data came in weaker than expected. The DJIA gained slumped 0.59% to end at 33,562.86 whereas Nasdaq and S&P500 dipped 0.09% and 0.20% to close at 13,229.43 and 4,273.79.

News For The Day

Yinson proposes to buy FPSO Atlanta for RM402.36m

Yinson Holdings is exercising a call option to acquire the entire 100% in floating production, storage and offloading unit (FPSO) Atlanta, which is slated for deployment to offshore Brazil, for up to US$87.9m (RM402.36m). Yinson is buying the entire equity in AFPS BV (AFPS) from Atlanta Field BV (AFBV). Under the terms of the call option, the acquisition will trigger the replacement of an existing two-year operation and maintenance agreement between Enauta and Yinson, with a 15-year time charter O&M agreement. -The Edge Markets

Bumi Armada expects Kraken FPSO shut-in to have material financial impact

Bumi Armada said its Armada Kraken floating production storage and offloading (FPSO) vessel operating in the UK North Sea has been shut-in due to a technical failure and is expected to have a material impact on its financials. The shut-in comes after the vessel’s prolonged period of top-quartile production and operational performance. – The Edge Markets

Careplus exploring sale, manufacturing of EVs with GoAuto

Glovemaker Careplus Group said it has signed a term sheet with GoAuto Group SB to explore the business of selling and manufacturing electric vehicles (EV) as joint venture partners. The two companies intend to collaborate to build an EV manufacturing and assembly hub on a 74-acre piece of land in Chembong, Negeri Sembilan owned by Careplus, the latter said. Careplus is also exploring the purchase of 30% in a unit of GoAuto by issuing 25m new Careplus shares, in order to import the Neta brand EV. -The Edge Markets

Crest Builder wins RM18.36m arbitration award in payment dispute

Crest Builder Holdings said an arbitration tribunal has awarded its subsidiary RM18.36m in relation to its RM31.08m counterclaim against Saujana Triangle SB in a payment dispute. The money was awarded to Crest Builder SB for certified sums, costs of idling and dayworks and retention sum, said Crest Builder. -The Edge Markets

Rex Industry to decommission Bukit Minyak factory

Rex Industry expects to recognise a provision for retrenchment costs amounting to about RM2m and other decommissioning expenses following the closure of its production facility in Bukit Minyak Industrial Park, Seberang Perai Tengah, Pulau Pinang. The closure is expected to be completed by 1QFY24. It has decided to shutter the 7.7-acre facility as part of a business rationalisation plan. -The Star

Our Thoughts

Wall Street closed lower yesterday as investors digested weaker-than-expected economic data ahead of next week's Federal Reserve meeting. The DJIA closed almost 200 points lower while Nasdaq and S&P500 were also in negative territory. In Hong Kong, stocks extended gains yesterday amid expectations Beijing will roll out measures to support an economic recovery and concerns about higher US interest rates eased. Back home, the FBM KLCI closed negative territory last Friday despite the positive performance across the region. We expect sentiment to remain cautious following the negative performance on Wall Street overnight, nonetheless, we believe the selldown on local equities seems unjustified as performance in 1QCY23 quarterly earnings were largely within expectations while the outlook of local economy remains positive. We anticipate the FBM KLCI to trend within the range of 1,380-1,390 range for today. The recent sell-off on banking stocks offers more potential upsides for investors, hence, we expect banks should be ripe for some accumulation soon. Meanwhile the Brent Crude oil rebounded to US$76.60/barrel after Saudi Arabia on Sunday said it will slash its oil output by another 1m barrels per day starting in July.

Source: Rakuten Research - 6 Jun 2023

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