• The FBM KLCI (-0.6%) gave up all its previous session’s gains yesterday, owing to the selloff in oil & gas and banking heavyweights as the crude oil price volatility remains unabated. Meanwhile, both the broader market and lower liners were also splashed in red with the FBM Ace (-3.1%) suffering the heaviest beating.
• Market breadth was overwhelmingly negative as losers trounced gainers on a ratio of 830-to-168 stocks. Traded volumes climbed by 6.8% to 2.35 bln shares on profit taking activities.
• Topping the decliners list on the big board was UMW (-35.0 sen), PPB (-36.0 sen), Petronas Chemicals (-20.0 sen), Hong Leong Financial Group (-16.0 sen) and Genting (-9.0 sen). Among the other biggest losers of the day were Lay Hong (-39.0 sen), KESM (-33.0 sen), Kossan (-31.0 sen), Shell (-29.0 sen) and Genting Plantations (-28.0 sen).
• On the flipside, notable gainers on the broader market were Scientex (+16.0 sen), Aeon Credit (+12.0 sen), C.I. Holdings (+11.0 sen) and Asia File (+10.0 sen). GAB jumped 38.0 sen after reporting a strong set of quarterly earnings. There were only five gainers on the key index – BAT (+18.0 sen), Petronas Dagangan (+8.0 sen), KLK (+4.0 sen) and IHH (+2.0 sen) and Axiata (+1.0 sen).
• ASEAN benchmark indices tanked as the Nikkei dipped 3.7%, technically falling into a bear market territory after the Japanese Yen strengthened against the Greenback. The Hang Seng Index fell 3.8%, dragged down by property and oil & gas stocks while the Shanghai Composite closed 1.0% lower. ASEAN indices, meanwhile, ended lower.
• U.S stockmarkets took another beating overnight as the Dow fell 1.6%, spooked by the rout in crude oil prices but it managed to trim its losses in the final trading hour. On the broader market, the S&P 500 dipped 1.2%, dragged down by the energy sector (-2.9%) as oil price tumbled to fresh multi-year lows. while the Nasdaq closed 0.1% lower.
• Following the rout in Asian stockmarkets, European benchmark indices opened sharply lower and remained low for the entire trading session. The FTSE and CAC fell 3.5% each, while the DAX declined 2.8%, hurt by the falling commodity prices.

THE DAY AHEAD

• Although we expected stocks on Bursa Malaysia to sustain its rebound yesterday, the weak market sentiments was overwhelming that sent the key index lower instead. As it is, the continuing plunge in crude oil prices is prolonging the weak sentiments that is also permeating to the global stockmarket environment, as evidenced by the sustained downtrend on the Dow that is getting closer to a bear market environment.
• With the weakness prolonging in global equity markets as well as commodity prices, we expect stocks on Bursa Malaysia to maintain its near term downtrend. On the downside, the critical 1,600 points support level now comes into play after the immediate support-turned-resistance level of 1,620 level was breached yesterday.
• We also think that the market’s weakness will extend the broader market and lower liners as retail investors will continue to retreat to the sidelines amid the increasingly difficult trading environment.

MACRO BRIEF

• Malaysia’s inflation rate rose 2.7% Y.o.Y to 114.8 in December 2015, in line with economists’ expectations, on higher prices for alcoholic beverages, food and health. The index for alcoholic beverages & tobacco group increased 22.8% Y.o.Y, restaurants & hotels (+4.7% Y.o.Y), food & non-alcoholic beverages (+4.6% Y.o.Y), health (+4.6%) and furnishing, household equipment & routine household maintenance (+4.2% Y.o.Y).
• On a monthly basis, the CPI remained unchanged at 114.8. For 2015, the CPI climbed 2.1% Y.o.Y. (The Star Online)

COMPANY BRIEF

• Bintai Kinden Corp Bhd has secured a contract worth RM120.0 mln from Optimal Property Management Sdn Bhd for the development of Kolej Teknologi Islam Melaka Bhd’s (KTIM) student campus for a concession period of 25 years for 7,002 students.
• The proposed development of the turnkey project comprises nine blocks of four storey student hostel buildings, one block of students’ center and one block of fellows’ house as well as associated infrastructure and common facilities on a total land size of approximately 15.6-ac. (The Star Online)
• Instacom Group Bhd, through indirect subsidiary, Vivocom Enterprise Sdn Bhd has secured a RM240.4 mln contract from Coneff Corp Sdn Bhd to construct two commercial towers comprising of two storeys of retail units, a one-storey recreational centre and a seven-storey car park in Sungai Besi, Kuala Lumpur.
• The project will begin in March 2016 and will be completed within 45 months. (The Star Online)
• Felda Global Ventures Holdings Bhd’s (FGV) targeted acquisition of PT Eagle High Plantations TBK is still in negotiations and is expected to be concluded by March 2016, according to FGV chairman Tan Sri Mohd Isa Samad. (The Edge Daily)
• Encorp Bhd has inked a Memorandum of Agreement with the Federal Land Development Authority (Felda) to nominate its unit, Encorp Bukit Katil Sdn Bhd as the master developer for Felda's integrated township in Bukit Katil, Melaka, which carries a gross development value (GDV) of RM3.20 bln.
• The 641.0 ac. township will be launched in phases, with construction to commence early 2017 and is expected to complete the development within 14 years. (The Star Online)
• Fututech Bhd aims to secure minimum construction jobs worth RM600.0 mln in its current financial year, from its tenderbook of RM1.17 bln, of which 80% are from its main clients, SP Setia Bhd, Eco World Group Development Bhd and Eastern and Oriental Bhd. The company’s current orderbook stands at RM2.70 bln, which could support its earnings until 2018. (The Edge Daily)
• Nexgram Holdings Bhd will be appointing a special auditor to address concerns raised on the existence of certain assets belonging to three subsidiaries. This came after Bursa Securities had, vide a letter dated 15th January 2016, informed Nexgram that it was unable to proceed with the processing of the listing application and draft circular in relation to the takeover offer by Nexgram for Ire-Tex Corp Bhd until its enquiries in relation to the units' assets are satisfactorily addressed.
• Nexgram warned that in the event Bursa decides not to consider the listing application and draft circular, the takeover will not succeed. (The Edge Daily)
• Pesona Metro Holdings Bhd has bagged a contract to build a building comprising a five-storey car park with retail space and a mechanical room from Pantai Medical Centre Sdn Bhd in Melaka, worth RM26.7 mln. The six-month project has commenced on 18th January 2016. (The Edge Daily)
• Guocoland (M) Bhd’s 2QFY16 net loss stood at RM7.5 mln vs. a net profit of RM3.0 mln in the previous corresponding quarter, mainly due to lower contribution from its projects in PJ City, Commerce One, Old Klang Road and Amandarii Kajang. Revenue for the quarter dropped 34.9% Y.o.Y to RM36.0 mln.
• For 1HFY16, cumulative net profit, however, jumped 103.9% Y.o.Y to RM13.9 mln. Revenue for the period climbed 27.5% Y.o.Y to RM106.8 mln. (The Edge Daily)
• In a joint filing to Bursa Malaysia, Berjaya Corp Bhd’s (BCorp) and Berjaya Sports Toto Bhd’s (BToto) was granted an exclusive 18-year contract to invest in and operate a nationwide computerised lottery in Vietnam after the investment registration certificate was issued by the Hanoi Department of Planning and Investment to BCorp and Vietnam Computerized Lottery One Member LLC
• The estimated cost of the project is about US$210.6 mln (RM919.2 mln) to be incurred over a period of 18 years. The investment required for the project will be funded through internal funds and/or borrowings over the tenure of the project. (The Edge Daily)
• Property developer Hua Yang Bhd’s 3QFY16 net profit dipped 2.5% Y.o.Y to RM30.2 mln, owing to slower sales. Revenue for the quarter, however, was flat at RM155.0 mln.
• For 9MFY16, cumulative net profit rose 9.7% Y.o.Y to RM88.7 mln. Revenue for the period grew 3.9% Y.o.Y to RM448.2 mln. An interim dividend of five sen for FY16 was declared. (The Edge Daily)

Source: M+ Online Research - 21 Jan 2016