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Author: MalaccaSecurities   |   Latest post: Wed, 29 Jan 2020, 10:33 AM


Mplus Market Pulse - Slight Oversold May Prompt Rebound

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Slight Oversold May Prompt Rebound

  • The FBM KLCI posted back-to-back losses, mostly dragged down by KLK (- RM1.54) following a sizable off-market deal and Indonesia’s investigation into Malaysian-linked plantation companies for alleged open burning activities. Similarly, the key-index (-1.7% W.o.W) also marked its third consecutive losses amid the prevailing negative sentiment. The lower liners were mostly in the red, together with the majority of the broader market, although the FBM Small Cap managed to end higher on Friday.
  • Market breadth was lacklustre as losers closely matched the winners on a ratio of 409-to-404 stocks. Traded volumes, meanwhile, fell 6.0% to 2.05 bln shares as global growth prospects remain bleak.
  • Plantation giant Kuala Lumpur Kepong (-RM1.54) led the heavyweights laggards, followed by Nestle (-40.0 sen), Petronas Chemicals (-16.0 sen), Tenaga Nasional (-6.0 sen) and Ambank (-5.0 sen). Meanwhile, broader market losers included United Plantations (-40.0 sen), Aeon Credit (-20.0 sen), UMS (-14.0 sen), Bintulu Port (-9.0 sen) and Harrisons (-8.0 sen).
  • On the other hand, semicon players like KESM (+48.0 sen), Vitrox (+33.0 sen), Malaysian Pacific Industries (+21.0 sen) and Unisem (+16.0 sen) were amongst the outperformers, together with Guan Chong Bhd (+17.0 sen). Notable bluechip winners, meanwhile, include Hong Leong Financial Group (+16.0 sen), Petronas Gas (+10.0 sen), Genting Malaysia (+8.0 sen), Hartalega (+6.0 sen) and Maxis (+5.0 sen).
  • Key benchmark regional stockmarkets were mostly muted as investors awaited the upcoming U.S. employment data after being spooked by soft data releases from earlier of the week. The Nikkei (+0.3%) toed the breakeven line after a late turnaround, on the back of the gains in the energy sector. The Hang Seng Index (-1.1%), meanwhile, closed lower, weighed down by escalated political unrest amid the ongoing public protests. Chinese markets were closed for a public holiday, while ASEAN stockmarkets finished mostly higher.
  • Wall Street rallied as investors cheered favorable employment numbers, ahead of renewed U.S.-China trade discussion this week. The Dow and the S&P 500 gained 1.4% on Friday, despite extending its losses for the third-straight week, while the Nasdaq (+1.4%) also ended positively.
  • Key European benchmark indices reported gains, taking cue from the positive sentiment spilled over from their U.S. counterparts. The FTSE close 1.1% higher, buoyed by a weaker Pound, while the DAX and the CAC rose 0.7% and 0.9% higher respectively. THE DAY AHEAD
  • It was another disappointing session on Bursa Malaysian as stocks continue to head south amid the country’s weak export performance that weigh on sentiments that is also seeing more foreign players exiting the Malaysian equity market.
  • Under the prevailing environment, the FBM KLCI’s outlook is still one of filled with uncertainty as there continues to be unabated selling on the index heavyweights. However, we think the selling is already overdone as it is already oversold from the recent selling. Therefore, there are some mild some bargain hunting activities that could allow for some reprieve but the upsides could be limited as market players will be adopting a wait-and-see approach ahead of the Budget 2020 announcement at the end of the week. On the upside, the key index may target the resistances at the 1,565 and 1,572 levels. The supports are at 1,551 and 1,532 points respectively.
  • Unlike the key index stocks, however, the lower liners are on a purple patch, helped by gains on rotational interest on technology stocks even as the exports of E&E products dipped. As the buying momentum on these stocks remains firm, we see further near term upsides on the lower liners, albeit the buying interest is still on the thin side. COMPANY BRIEF
  • AirAsia Group Bhd and its sister airline, AirAsia X Bhd has filed a claim RM479.8 mln claims at the Kuala Lumpur High Court against Malaysia Airports (Sepang) Sdn Bhd (MASSB), a unit of Malaysia Airport Holdings Bhd (MAHB) for losses and damages suffered by the carrier.
  • The claim against MASSB is for losses and damages suffered due to the negligence in the management, operation, maintenance and provision of airport services and facilities at klia2. MASSB is responsible for managing and operating Kuala Lumpur International Airport (KLIA) and klia2. (The Star Online)
  • Top Glove Corp Bhd has earmarked RM600.0 mln as capital expenditure (capex) for the financial year ending 31st August 2020 (FY20). The glove manufacturer spent RM461.8 mln in capex in FY18 while for the just-ended FY19, it allocated RM632.2 mln. (The Edge Daily)
  • Prestariang Bhd has announced three components under its master licensing agreement (MLA) 3.0 with the Finance Ministry to encourage digital transformation in the public sector.
  • The RM222.6 mln MLA 3.0 is an extension and renewal of the MLA 2.0. Prestariang said the MLA 3.0 is for a period of three years from 1st February 2018 till 31st January 2021. (The Edge Daily)
  • Icon Offshore Bhd has secured a RM36.0 mln contract from Petronas Carigali Sdn Bhd to provide an offshore support vessel for petroleum arrangement contractors’ production operation. The contract has a firm period of 695 days, expiring on 1st August 2021, with an extension option of one year-plus-one year. (The Edge Daily)
  • Sentoria Group Bhd has proposed to raise up to RM16.6 mln in fresh funds via a private placement. Proceeds from the proposed private placement will be used for working capital. (The Edge Daily)
  • Sime Darby Plantation Bhd has joined forces with global non-profit organisation Conservation International to help map a sustainable future for palm oil. The two sides will work to further build sustainability into the core of Sime Darby Plantation's operations and supply chain as well as to identify opportunities to deepen the impact of its interventions across the sector. (The Edge Daily)
  • MISC Bhd had sold two seven-year-old chemical tankers, namely the Bunga Lotus and Bunga Lucerne, to Vietnambased shipping company FGAS Petrol for just under US$33.0 mln (about RM138.0 mln). The two 20,000 deadweight tonnage (DWT) ships will join a fleet of nine liquefied petroleum gas vessels and two vintage very large gas carriers, which FGAS Petrol added to its fleet earlier this year. (The Edge Daily)
  • Anzo Holdings Bhd’s RM153.0 mln construction contract in Melaka has been terminated, citing “financial challenges” as reason. The contract involved turnkey design, approval, build and delivery of 120 units of service suites, 24 units of SPA villas, that is part of the Porto De Melaka Hotel and Resort Development in Melaka. (The Edge Daily)
  • LTKM Bhd has re-designated its Managing Director Datuk Tan Kok as Executive Chairman. Its non-executive Chairman, Datuk Ir. Kamarudin Md Derom, meanwhile, has been redesignated as a Non-Independent director. The group also appointed Tan’s daughter-in-law, Loh Wei Lingas Executive Director and Mok Kam Loong as an Independent Director. (The Edge Daily)

Source: Mplus Research - 7 Oct 2019

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