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Author: MalaccaSecurities   |   Latest post: Fri, 24 Jan 2020, 2:38 PM


Mplus Market Pulse - 9 Dec 2019

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Follow-Through Buying

  • The FBM KLCI ended Friday on a positive note, boosted by extended buying-support in selected heavyweights. All the lower liners - the FBM Small Cap, FBM Fledgling and the FBM ACE closed 0.8% higher, together with more than half of the broader market constituents.
  • Market breadth remained upbeat as winners outpaced the losers on a ratio of 497-to-355 stocks, while traded volumes edged 4.4% to 2.49 bln shares amid improved trade sentiments.
  • Main bourse outperformers were Kuala Lumpur Kepong (+42.0 sen), Petronas Gas (+30.0 sen), MISC (+18.0 sen), Tenaga Nasional (+16.0 sen) and Sime Darby Plantations (+13.0 sen). Other broader market gainers include Bintulu Port (+20.0 sen), Chin Teck Plantations (+15.0 sen), Batu Kawan (+14.0 sen), Revenue Group (+14.0 sen) and UWC (+14.0 sen).
  • On the other side of the trade, Fraser & Neave (-50.0 sen), Malaysian Pacific Industries (-26.0 sen), Aeon Credit (- 24.0 sen), Carlsberg (-16.0 sen) and Panasonic Manufacturing (-12.0 sen) weighed on the broader market, while, blue-chip gauge losers include Nestle (- 50.0 sen), Petronas Dagangan (-50.0 sen), Public Bank (-18.0 sen), Malaysia Airports (-11.0 sen) and Hong Leong Bank (-10.0 sen).
  • Asian stockmarkets finished on an upbeat tone, as China and Washington reportedly move closer to sealing an initial trade agreement. The Nikkei rose 0.2%, for the second-straight session, boosted by gains in Information Technology-related shares. The Hang Seng Index also jumped 1.1% to 26,498.4 points, followed by the Shanghai Composite (+0.4%), while ASEAN equities closed mostly higher on Friday’s closing bell.
  • Wall Street – the Dow (+1.2%), the S&P 500 (+0.9%) and the Nasdaq (+1.0%) rallied, as investors cheered strongerthan-expected payrolls data, as well as improved consumer sentiment and extended trade optimism.
  • Meanwhile, U.K. equities mostly advanced as the FTSE jumped 1.4% ahead of its general election, together with the DAX (+0.9%) and the CAC (+1.2%) as investors look forward to key economic data from Germany and the Eurozone this week, for signs of improvement in the global economy.

The Day Ahead

  • Bargain hunting activities, coupled with mild signs of window dressing activities shored the key index to close on a positive tone on last Friday. Following the sharp gains on Wall Street, we think the key index may see further recovery, starting the week on a buoyant mood. However, we remain wary that gains will keep in check as ahead of the impending next wave of tariffs on Chinese goods as the two economic powerhouse see no signs of developments over the trade talk progress.
  • On the upside, the local bourse may continue to play catch-up with the gains across its’ regional peers as the FBM KLCI may head towards the 1,580-1,590 levels on bargain hunting activities in recent beaten down stocks. On the flipside, the 1,560 level will serve as the main support, followed by 1,550 level, which is also the key index’s recent low on October 2019.
  • The lower liners and broader market shares could also head higher in tandem with the improved sentiments, but the lackluster recent conclusion of corporate earnings could limit their upsides over the near term, in our view.

  • MISC Bhd’s unit AET Tanker Holdings Sdn Bhd has secured three long-term time charter contracts from Brazil Shipping I Ltd valued at US$245.0 mln (RM1.02 bln). The contracts were awarded by Brazil Shipping, a Shell Group entity, and the charter is expected to start in 2022. AET will own and operate these newbuilding Suezmax class dynamic positioning shuttle tankers to operate in international and Brazilian waters. (The Star Online)
  • Multi-Purpose International Ltd (MPIL), a wholly-owned Labuan company of Magnum Bhd, has received notice from the Inland Revenue Board for past taxes totalling RM144.0 mln. This is for the assessment years of 2014, 2015, 2017 and 2018 amounting to RM40.3 mln, RM40.4 mln, RM38.7 mln and RM24.5 mln, respectively. The board is challenging the validity of the said notices and the penalty imposed. (The Star Online)
  • Vsolar Group Bhd plans to raise up to RM65.9 mln via a renounceable rights issue with free warrants to meet its capital expenditure (capex) for development and construction of biomass plants. The exercise entails the issuance of up to 1.32 bln rights shares together with up to 878.6 mln warrants at an indicative issue price of 5 sen per rights share. The cash call will be on the basis of three rights shares for every one existing Vsolar share held, together with two free warrants for every three rights shares subscribed, at an entitlement date to be determined later.
  • Based on the indicative issue price of 5 sen per rights share, Vsolar expects to raise between RM8.2 mln and RM65.9 mln. The exercise price of the warrants will be determined by the board of directors. (The Edge Daily)
  • MMC Corporation Bhd has reported that a joint venture between MMC Engineering & Construction Sdn Bhd (MMCEC), MMC Oil & Gas Engineering Sdn Bhd (MMCOG) and Sedia Engineering Works Sdn Bhd has been awarded an RM131.4 mln contract for the engineering, procurement, construction and commissioning of the PGU-I gas pipeline replacement project. MMCEC and MMCOG are indirect whollyowned subsidiaries of MMC.
  • The project comprises the NPS 36 pipeline and associated station works for the total length of 33km from Gas Processing Kertih to Bukit Anak Dara Kijal in Kemaman, Terengganu. The project is expected to be completed within 35 months from the effective date. (The Edge Daily)
  • Sime Darby Plantation Bhd is divesting its entire stake in Sime Darby Plantation Liberia Inc (SDPL) to Mano Palm Oil Industries (MPOI). This was approved by the group’s board of directors. The Government of Liberia has also consented to the divestment of SDPL’s shares to MPOI. This decision is part of Sime Darby Plantation’s current asset monetisation exercise, which includes the divestment of underperforming assets or assets that have achieved its full value potential for disposal. (The Edge Daily)
  • AirAsia Group Bhd has entered into a preliminary shareholders agreement with Universal Music Malaysia Sdn Bhd to set up a record label to promote Southeast Asian talents. The joint-venture company will be named RedRecords Sdn Bhd and aims to popularise Asian pop music through artists and repertoire, artist development, music recordings and contents, management and agency services related to all entertainment activities, and music publishing and merchandising. (The Edge Daily)  

Source: Mplus Research - 9 Dec 2019

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