• Tracking the quick profit taking activities on the overnight Wall Street, the FBM KLCI (-0.8%) gave up some of its previous session gains last Friday, but the key index managed to snap the streak of consecutive weekly declines. Meanwhile, the broader market was also painted in red, while the FBM Fledging (+0.1%) was the sole outperformer in the broader market.
• Expectedly, market breadth turned negative as losers outnumbered gainers on a ratio of 498-to-335 stocks. Traded volumes fell by 10.6% to 1.74 bln shares amid the lackluster market sentiment.
• More than two-thirds of the key index constituents retreated, dragged down by BAT (-40.0 sen), followed by Genting (- 18.0 sen), Petronas Gas (-16.0 sen), Axiata (-15.0 sen) and KLCC (-14.0 sen). Glove manufacturers like Top Glove (-60.0 sen) and Kossan (-26.0 sen) topped the boarder market decliners, while the other notable losers of the day were Lafarge (-41.0 sen), Ajinomoto (- 30.0 sen) and Allianz (-30.0 sen).
• Significant advancers on the broader market were P.I.E Industrial (+72.0 sen), MPI (+42.0 sen), Scientex (+35.0 sen) and Tecnic (+31.0 sen). Comintel Corporation jumped 27.0 sen after reporting a strong set of 3QFY16 earnings. There were only four gainers on the FBM KLCI – KLK (+12.0 sen), Hong Leong Financial Group (+4.0 sen), Genting Malaysia (+2.0 sen) and Westports (+2.0 sen).
• After Bank of Japan unveiled its ¥300 bln ETF purchases, coupled with an extension on the purchase of government bonds with maturities between 7-12 years, the Nikkei fell 1.9% as investors were left disappointed as the new policies were below expectations against the previous easing programs. The Hang Seng Index declined 0.5%, while the Shanghai Composite closed flat. ASEAN indices, meanwhile, ended mostly negative.include Top Glove (+RM1.34), MPI (+32.0 sen), Asia File (+31.0 sen), Apollo (+20.0 sen) and Scientex (+55.0 sen) – the latter rallied after its 1QFY16 earnings doubled.
• Wall Street ended the volatile week on a dour note as the Dow (-2.1%) erased all of its earlier weekly gains, dragged lower by banking stocks on fears of their exposure to highly leveraged energy companies. On the broader market, the S&P 500 ended 1.8% lower, dragged down by the financials (-2.5%) and technology (-2.0%) sectors, while the Nasdaq declined 1.6%.
• Earlier, European equities also sank as the FTSE fell 0.8%, but losses were limited due to the rebound in mining stocks as metal prices were mostly higher. The CAC fell 1.1% after its Producer Price Index for November rose only 0.1% M.o.M, while the DAX closed 1.2% lower.

THE DAY AHEAD

• After the euphoria over the Federal Reserve’s first interest rate hike in nearly a decade last week, markets have turned weaker again as the sustainability of global economic recovery has returned to the fore. Questions are now abound as to whether the higher interest rates could slow or derail the recovery prospects and this has caused markets to react negatively at the end of last week.
• With global markets appearing on the defensive side, we also expect stocks on Bursa Malaysia to continue its consolidation trend over the near term as sentiments and the market’s direction will continue to be dictated by development overseas as domestic leads are far and in between. With the 1,650 level failing to hold and sentiments remaining frail, the FBM KLCI could well head towards the 1,630 level at the start of the week. Investors will also be unwilling to hold open positions in the upcoming holiday-shortened week and we think market breath will be on the low side. be window dressing activities later in the month that could potentially lift the FBM KLCI to the 1,700 points level. Before that, the immediate resistances are at the 1,660-1,680 levels.

COMPANY BRIEFS

• Zelan Holdings (M) Sdn Bhd (ZHSB), which is a wholly-owned subsidiary of Zelan Bhd, has received two notices of demand from Meena Holdings LLC for a combined AED92.5 mln (RM108.0 mln). The notices are in respect of two guarantees issued by the bank on 28th August 2014, amounting to AED41.0 mln and AED51.6 mln, respectively.
• To recap, Zelan had on 17th September 2015 issued a notice to Meena Holdings to terminate a contract for a package of works for the Meena Plaza project, which was first inked on 1st April 2008. Meena Holdings had failed to pay it AED27.6 mln (RM32.2 mln) of completed work and materials at site. It had also terminated the contract due to continuous interference with the valuation and certification of ZHSB's progress claims. (The Edge Daily)
• Hong Leong Bank Bhd (HLB)'s rights issue, which is targeted to raise gross proceeds of RM2.99 bln, is oversubscribed by 19.1%. HLB had offered a total of 286.4 mln new shares in HLB at RM10.40 per rights share on the basis of four rights shares for every 25 existing HLB shares held by entitled shareholders. The rights shares are expected to be listed on the Main Market of Bursa Malaysia on 28th December 2015. (The Edge Daily)
• Key Alliance Group Bhd (KAG) has fixed the issue price for the placement of 58.1 mln shares at five sen per placement share, which should raise some RM2.9 mln for the group. The issue price represents a premium of approximately 0.0094 sen or 23.2% over the five-day volume weighted average market price of the KAG shares up to and including 17th December 2015, being the last market day immediately preceding the price-fixing date of 0.0406 sen per KAG Share. (The Edge Daily)
• Wah Seong Corp Bhd has proposed to dispose of 25.0% of its stake in WDG Resources Sdn Bhd (formerly known as Advanced Piping Systems Sdn Bhd) for RM200,000 in cash to Epilog Tegap Sdn Bhd as part of WDG's expansion plan.
• The remaining 600,000 shares, or a 75.0% stake in WDG, will be taken up by Syn Tai Hung Trading Sdn Bhd, an indirect wholly-owned subsidiary of Wah Seong, for a total cash consideration of RM600,000.
• WDG was previously involved in the business of manufacturing and trading of straight pipes and fittings, but had ceased such operations in year 2012 and has remained dormant to date. (The Edge Daily)
• My E.G. Services Bhd (MyEG)’s shareholders have approved the e-government services provider's proposed one-on-one bonus issue of up to 1.2 bln new shares to reward its shareholders in the annual general meeting and extraordinary general meeting carried on 18th December 2015. The group targets to complete the exercise by 1Q2016. (The Edge Daily)
• Berjaya Assets Bhd has bought back the 20.0% stake in Berjaya Times Square Sdn Bhd (BTS) - the owner and manager of its namesake shopping-cum-leisure mall in Kuala Lumpur, which was sold to the Sultan of Johor two years ago, for the same price of RM250.0 mln in cash.
• The cash consideration for the purchase was funded through borrowings. Subsequently, the gearing of the Berjaya Assets group also increased from 0.3x to 0.4x. (The Star Online)
• Gaming company Berjaya Sports Toto Bhd (BToto)’s 2QFY16 net profit fell 29.1% Y.o.Y to RM70.7 mln, mainly due to the GST being absorbed coupled with a higher prize payout. Revenue for the quarter, however, rose 15.1% Y.o.Y to RM1.44 bln.
• For 1HFY16, cumulative net profit declined 19.6% Y.o.Y to RM143.1 mln. Revenue for the period, however, gained 11.4% Y.o.Y to RM2.78 bln. An interim dividend of five sen per share was declared. (The Star Online)
• Ajinomoto (M) Bhd, which was queried by Bursa Malaysia over unusual market activity, is unaware of the reasons for the spike in its share price. It was also not aware of any rumour or report concerning the business and affairs of the group that might account for the trading activity.
• On 17th December 2015, Ajinomoto’s share price surged to a high of RM9.30, which was a RM2.00 jump from the previous week. (The Star Online)
• In-flight caterer Brahim’s Holdings Bhd is selling a 49.0% stake in its subsidiary Brahim’s Airline Catering Holdings Sdn Bhd (BACH) to Singapore-based SATS Ltd for RM218.0 mln cash based on certain conditions. On completion of the deal, Brahim’s will get RM110.0 mln and up to RM108.0 mln upon achieving certain financial targets.
• The disposal represents a premium of 68.2% over Brahim’s cost of investment of RM129.6mil for the 49.0% stake. Brahim’s would use RM19.5 mln of the RM110mil sales proceeds for working capital, RM17.3 mln for the repayment of shareholder’s advance while RM62.8 mln will be repaid bank borrowings, reducing its pro-forma gearing from 0.6x to 0.2x. Based on the interest rate of 6.5% per annum, the savings in finance cost is estimated to be approximately RM4.1 mln per annum. (The Star Online)

Source: M+ Online Research - 21 Dec 2015