M+ Online Research Articles

Author: MalaccaSecurities   |   Latest post: Fri, 28 Feb 2020, 2:55 PM


Mplus Market Pulse - 18 Jul 2018

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Selective Buying Still Rules

  • The local key-index closed in the green, boosted by sharp gains in the eleventh hour on extended buying-interest in selected blue chips. The majority of the lower liners – the FBM Small Cap (+0.2%) and the FBM Fledgling (+0.2%) also advanced, with the exception of the FBM Ace (-0.8%).
  • Market breadth remained positive with 473 advancers vs. 376 decliners, while 409 stocks flatlined. Traded volumes also improved by 14.5% to 2.34 bln shares, lifted by renewed trading interest in the lower liners.
  • Significant advancers on the blue-chip gauge include Public Bank (+58.0 sen), Digi (+32.0 sen), Tenaga Nasional (+14.0 sen), Genting Malaysia (+6.0 sen) and Petronas Gas (+6.0 sen). Other gainers, meanwhile, were Heineken Malaysia (+40.0 sen), Scientex (+19.0 sen), Kossan Rubber (+12.0 sen), PIE Industrial (+12.0 sen) and BAT (+10.0 sen).
  • Broader market underperformers comprised of Carlsberg (-30.0 sen), United Plantations (-30.0 sen), Ajinomoto (-16.0 sen), Malaysian Pacific Industries (-16.0 sen) and Genting Plantations (- 10.0 sen). Meanwhile, Hong Leong Financial Group (-10.0 sen), IOI Corporation (-10.0 sen), Sime Darby Plantation (-9.0 sen), Petronas Chemicals (-7.0 sen) and Dialog (-3.0 sen) weighed on the key-index yesterday.
  • Asian equities mostly retreated on Tuesday, dragged down by the extended weakness in crude oil prices amid concerns of oversupply. Mainland Chinese stocks declined as the Shanghai Composite closed 0.6% lower on losses in energy producers, while the Hang Seng index tanked 1.3% to 28,181.7 points. The Nikkei, however, bucked the otherwise downbeat sentiment, closing 0.4% higher amid a subdued Yen, while ASEAN equities finished mostly in the red.
  • Wall Street shrugged off its weak start, climbing higher as retailers, household and technology stocks rallied, boosted by upbeat corporate earnings outlook, while, hawkish U.S. Federal Reserve outlook lifted the Greenback. The Dow (+0.2%) and the S&P 500 (+0.4%) finished positively, together with the Nasdaq (+0.6%), which snagged a fresh record high on Tuesday’s close.
  • European equities were mostly higher as investors digest a series of U.S. corporate results ahead of Federal Reserve Chairman Jerome Powell’s scheduled appearance at Capitol Hill. The FTSE (+0.3%) settled in the green after rebounding from the negative territory earlier due to the recovery in mining stocks. Germany’s DAX and France’s CAC also advanced, closing 0.8% and 0.2% higher respectively.

The Day Ahead

  • Institutional buying on selected index heavyweights at the bell once again helped the key index to notched strong gains amid a still largely mixed market environment. As it is, there remain few noteworthy leads to entice market players, but with little negative developments on the ongoing trade dispute between the U.S. and its major trading partners, there is some measure of calmness for increased trading activities.
  • The diminishing foreign selling of Malaysia equities is also giving rise to bargain hunting opportunities as the key index attempts to consolidate its position above the 1,700 points level. With the market calmness still permeating, coupled with the continuing institutional support, the upside bias remains for now, albeit we think the recent gains may have been excessive already.
  • Hence, we see gains becoming more difficult to come by as much of the recent upsides are superficial and on low volumes, suggesting that the market following is still thin. Therefore, we see the 1,740 level serving as the immediate resistance, followed by the 1,750 level. The supports, meanwhile, are at 1,730 and 1,720 respectively.
  • The lower liners and broader market shares, meanwhile, are showing some signs of revival and may continue to gather strength, but the still weak market following could limit their near term upsides.


  • Utusan Melayu (M) Bhd has appointed four new Independent Directors following a shake-up in its boardroom. The new Directors include Datuk Ibrahim Yahaya, who was a press secretary to former Deputy Prime Minister, Datuk Seri Ahmad Zahid Hamidi and former Member of Parliament for Setiawangsa, Datuk Ahmad Fauzi Zahari. Joining them are the former Chief Executive of Menteri Besar Inc (Terengganu), Wan Zalizan Wan Jusoh and Datuk Mohd Azmi Othman. Azmi currently serves as a director at KYM Holdings Bhd and Majuperak Holdings Bhd. (The Star Online)
  • Advancecon Holdings Bhd has bagged its second earthworks contract worth RM20.5 mln for the Eco Ardence mixed development in Setia Alam. The contract, entailing earthworks and ancillary works for the second phase of the project, is for nine months from site possession in July 2018. Advancecon’s current orderbook stands at RM937.0 mln which provides earnings visibility until end-2020. Along with the latest contract, Advancecon’s new wins in the financial year to date amounts to RM390.6 mln. (The Edge Daily)
  • Hiap Teck Venture Bhd has announced that its blast furnace at Eastern Steel Sdn Bhd has resumed production after a halt of nearly three years. Eastern Steel is principally involved in the manufacturing, of a range of steel products using the blast furnace plant, with a current production capacity of 700,000 tonnes of steel slabs per annum.
  • Its products mainly sold locally to satisfy domestic demand and also exported to neighbouring countries, principally Indonesia and Thailand, which are net importers of steel slabs. (The Edge Daily)
  • Poh Huat Resources Holdings Bhd is buying a warehouse-cum-office showroom in Cranbourne West, Victoria, Australia for A$5.0 mln from JSNJ Investment Pty Ltd of Australia, with the intention to hold the property as investment for rental to third parties. The board views that the property has good potential in terms of capital appreciation and rental yield, given the demographic and commercial potential of the Cranbourne area.
  • The warehouse-cum-office showroom acquisition, which comprises a 2,912 sq.m. one-storey warehouse and a 300 sq.m. office with retail/showroom facilities at the front of the property, will be funded internally. (The Edge Daily)
  • Velesto Energy Bhd has announced that the Singapore International Arbitration Centre has awarded its subsidiary, Velesto Drilling Sdn Bhd an early termination fee of US$19.2 mln. The arbitration case was against Frontier Oil Corp over a dispute related to the breach of a drilling contract in north-west Palawan in the Philippines, which was inked in September 2014. (The Edge Daily)
  • Barakah Offshore Petroleum Bhd has secured an extension to its contract with Petroliam Nasional Bhd (Petronas) which is due to expire in December 2018, to 26th December 2019. The scope of the contract includes transportation and installation of facilities such as pipelines, structures and related equipment for offshore oil and gas fields for Petronas and Production Arrangement Contractors (PACs) within Malaysia.
  • The contract’s value would depend on the number of work orders issued by the clients during the course of the contract duration, based on mini bidding exercise among contractors. (The Edge Daily)
  • JAKS Resources Bhd has secured an ad interim order at the High Court today to restrain two financial institutions from releasing its RM50.0 mln bank guarantee to Star Media Group Bhd, until the Enrinford injunction is decided. The RM50 mln guarantee is in relation to an agreement between Star and Jaks for the latter to develop the 15-storey “Tower A” within the Pacific Star development in Section 13, Petaling Jaya by end-July 2018.
  • The order granted on 18th July 2018 is effective until 23rd July 2018, being the date when the inter-parties hearing of the application for the Erinford injunction is heard by the High Court, said Star, while JAKS said its lawyers have also withdrawn the application for stay of execution. (The Edge Daily)
  • Kumpulan Perangsang Selangor Bhd's (KPS) is buying a 4.5 ac. piece of land in Bayan Lepas Industrial Park, Penang for RM27.7 mln from Penang Development Corp, on which it intends to build a new electronic manufacturing services (EMS) factory.
  • Construction of the new factory is expected to commence in 1H2019 with target completion in 2020. The new land, over three times bigger than the 1.4 ac. land that currently houses the existing EMS facility, is located some 500m from CPI's engineering thermoplastics (ETP) manufacturing division and 2.5km from the existing EMS facility. (The Edge Daily)
  • My EG Services Bhd (MyEG) clarified that it is still in the midst of negotiation with potential business partners for its business expansion plans. The expansion covers the initiation of a remittance service and MyEG's maiden venture into Bangladesh, which the actual commencement of operations has yet to be determined at this juncture. (The Edge Daily)
  • Malaysia Airports Holdings Bhd (MAHB) is partnering with four major aviation players, namely, Daher, ExecuJet, IER and XPeranti and Sigfox, in its aim to position Malaysia as a global hub. MAHB had signed Memoranda of Understanding (MoUs) with the four aviation players at the Farnborough International Airshow (FIA).
  • The partnership will kickstart the cocreation framework that would translate in passengers experiencing the enhanced services which are automated and digitalised. (The Edge Daily)
  • Kumpulan Jetson Bhd has teamed up with Helios Photovoltaic Sdn Bhd to jointly bid for solar power projects in Sabah. Jetson has entered into a Heads of Agreement with Helios Photovoltaic Sdn Bhd for the proposed project, as well as to co-operate to procure the award of the whole or any of the contract packages for the proposed projects. The two companies will form a special purpose vehicle to undertake the proposed projects, with both holding an equal stake. (The Edge Daily)  

Source: Mplus Research - 18 Jul 2018

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