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Author: MalaccaSecurities   |   Latest post: Fri, 13 Sep 2019, 4:06 PM


Mplus Market Pulse - 5 Sept 2018

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Contagion Concerns Rise

  • The FBM KLCI extended its losing streak despite paring earlier losses amid the devaluation in Emerging Market currencies. On the flipside, all the lower liners finished higher, boosted by bargain-hunting activities following the recent retraction while the broader market stayed mixed.
  • Market breadth turned positive as winners overtook losers on a ratio of 492- to-398 stocks, although traded volumes fell 9.1% to 2.41 bln stocks amid the riskoff sentiment.
  • Chart-toppers were banking heavyweights like Hong Leong Bank (+20.0 sen) and RHB Bank (+7.0 sen), followed by Nestle (+90.0 sen), Hartalega (+12.0 sen) and PPB Group (+8.0 sen). Leading the broader market higher was Dufu Technology (+30.0 sen), Aeon Credit (+26.0 sen), Carlsberg (+26.0 sen), Petron Malaysia (+21.0 sen) and Lii Hen Industries (+15.0 sen).
  • On the other hand, Hong Leong Industries (-26.0 sen), Heineken Malaysia (-24.0 sen), United Plantations (-18.0 sen), Dutch Lady (-14.0 sen) and Malaysian Pacific Industries (-14.0 sen) retreated. Key-index decliners, meanwhile, were telco giants like Axiata (-6.0 sen) and Digi (-6.0 sen), alongside Kuala Lumpur Kepong (-6.0 sen), Dialog (-4.0 sen) and MISC (-4.0 sen).
  • Key regional benchmark markets ended mostly higher as investors digested fresh economic data, while geopolitical concerns lingered in the background. The Nikkei (-0.1%) slipped marginally into the red after erasing earlier gains, while the Shanghai Composite and the Hang Seng Index ended higher by 1.1% and 1.0% respectively. ASEAN stockmarkets, meanwhile, closed mixed on Tuesday’s closing bell.
  • Wall Street moved incrementally lower on its first trading day in September amid rising trade tensions and the strengthening Dollar. The Dow (-0.1%) retreated, weighed down by losses in Nike following its ongoing campaign scandal. Meanwhile, both the Nasdaq and the S&P 500 ended weaker by 0.2%.
  • Major European blue-chip bourses were splashed in red, dragged down by losers in automakers and metal prices. The FTSE (-0.6%) slid, albeit slightly cushioned by gains in banking giants. Similarly, the CAC and the DAX traded on a downward trajectory, falling 1.1% and 1.3% losses respectively.

The Day Ahead

  • We think the downside risk is still prevalent despite the Malaysian market finding support to limit the losses yesterday. The lingering downside pressure is mainly from the ongoing rout in Emerging Market stocks and currencies that is likely to weight on Malaysian stocks for longer.
  • As it is, the fears of the contagion effect on Malaysian stocks is very real after currencies of Turkey, South Africa, Argentina and Indonesia were hammered amid fresh concerns over their economic health. In addition, there remains little progress on the U.S.-China trade talks that leaves the option of further tariffs still on the cards.
  • Although we think there is still downside risk, we continue to think that the key index should be well supported by local institutions as foreign participation has largely dissipated in the market’s rout two months ago. Therefore, we think the selling will be measured and this could allow the key index to find support at the 1,800-1,810 levels. If the level gives way, the next support is at 1,790. The resistances, meanwhile, are at 1,820 and 1,840 respectively.
  • The lower liners, meanwhile, are starting to stage a rebound yesterday from oversold. We see further bargain hunting activities on FBM Small Cap stocks over the near term, but the gains may be limited due to the increasingly cautious market that could prompt quick profit taking activities.


  • Sapura Energy Bhd has secured its maiden oil and gas exploration project in Australia. This is through farm-in agreements to three exploration permits held by Finder Exploration Pty Ltd. On completion, Sapura Upstream will acquire a 70.0% interest in all three exploration permits and assume operatorship, while Finder will retain a 30% interest. Through the farm-in joint venture, Sapura and Finders plan to drill two exploration wells in the Carnavon Basin permits between 2019 and 2020. (The Star Online)
  • IJM Corp Bhd has bagged a RM505.0 mln contract from Affin Bank Bhd to construct the bank's 47-storey headquarters building at Tun Razak Exchange (TRX). The project is expected to be completed by December 2020.
  • The Grade-A office building would cover a gross floor area of about 76,600 sq. m. and would be built over a land area of about 0.5 ha. Currently, IJM Corp's outstanding construction order book stood at a near all-time high of RM9.30 bln. (Bernama)
  • Pesona Metro Holdings Bhd (PMHB) has secured a RM264.3 mln construction project from TA Global Bhd. Work on the project commenced on 15th August 2018 and is expected to be completed on 14th April 2021. (Bernama)
  • Borneo Aqua Harvest Bhd has proposed a bonus issue of up to 939.0 mln shares, on the basis of one bonus share-for-every existing share. Assuming a maximum scenario, the group will have an enlarged share capital of 1.88 bln shares post bonus issue. (The Edge Daily)
  • Ark Resources Bhd’s Non-Independent Non-Executive Chairman, Datuk Mohd Salleh Yeop Abdul Rahman has resigned from the position with effect 4th September 2018. The resignation comes after he had disposed of his 10.4% indirect stake in Ark Resources, held via Rintis Komersial Sdn Bhd, on 29th August 2018. He has also ceased to be a substantial shareholder of Ark Resources. (The Edge Daily)
  • UEM Edgenta Bhd has clarified that the delay of the construction of the Pan Borneo Highway in Sabah will not have a significant impact on the group as the project size is small in relative to its total earnings. The project falls under the group’s asset consultancy segment, which contributes only 7.0%, or RM65.8 mln of the group’s revenue in 1H2018.
  • Additionally, UEM Edgenta will only pursue performance-based contracts for its infrastructure segment from January 2019 to improve cost efficiency and service delivery. Some of its infrastructure management and maintenance contracts with PLUS Expressways Bhd have been renewed to suit the PBC agenda. (The Edge Daily)  

Source: Mplus Research - 5 Sept 2018

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