• Following Bank Negara’s announcement to reduce the Statutory Reserve Requirement (SRR) by 50 basis points to 3.5%, effective 1st February 2016, banking heavyweights rallied last Friday that tipped the FBM KLCI 1.5% higher. The positive market sentiment was also echoed throughout the broader market and lower liners – the latter led by the FBM Ace (+1.9%) index.
• Market breadth was broadly positive as gainers outnumbered losers on a ratio of 712-to-217 stocks. Traded volumes, however, fell by 23.3% to 1.93 bln shares as investors opted to wait for further market stability.
• Lifting the key index higher were banking heavyweights like Hong Leong Financial Group (+50.0 sen), Public Bank (+34.0 sen) and CIMB (+18.0 sen), while BAT and PPB Group climbed RM1.00 and 48.0 sen respectively. Among the notable gainers on the broader market include LPI Capital (+30.0 sen), Ajiya (+27.0 sen), Riverview (+20.0 sen) and Lafarge (+17.0 sen). Fraser & Neave, meanwhile, rose 20.0 sen after announcing its expansion plans.
• On the contrary, the significant decliners of the day were NSOP (-15.0 sen), Nestle (-10.0 sen), Ajinomoto (-9.0 sen), Boustead (-9.0 sen) and Karex (-9.0 sen). Meanwhile, MISC (-7.0 sen) and Petronas Chemicals were the only two decliners on the big board.
• ASEAN benchmark indices rallied as the Nikkei rose 0.9% to close above the 17,000 psychological level after Bank of Japan has announced of possible further stimulus measures. The Hang Seng Index gained 1.4% while the Shanghai Composite rose 0.8%, boosted by gains in energy stocks. ASEAN indices, meanwhile, ended mostly positive.
• Wall Street closed sharply lower overnight after two straight sessions of gains as the Dow fell 1.3% with losses accelerating in the final trading hour. On the broader market, the S&P 500 closed 1.6% lower, dragged down by energy (-2.3%) and materials (3.2%) sectors on a renewed selloff in commodities, while the Nasdaq dipped 1.6%.
• European benchmark indices also took a dip – the FTSE (-0.4%), CAC (-0.6%) and DAX (-0.3%) all fell as crude oil prices tumbled. The negative market sentiment was further compounded by the weak Germany’s Ifo Business Climate for January 2016 at 107.3 – the lowest in 12 months.

THE DAY AHEAD

• After Friday’s big market moves, we think the Malaysian stockmarket will take a breather to start its shortened trading week. The weak overnight performance on the Dow and European stockmarkets will also prompt quick profit taking activities and this is expected to see the key index dropping back amid the still cautious market environment.
• For now, the 1,620 points level will continue to serve as the immediate support level on the FBM KLCI, with the 1,600 points level remaining as the major support. The immediate resistance, meanwhile, stays at around the 1,630 level, before the 1,650 level comes into play.
• We also see quick profit taking activities among stocks on the broader market and lower liners due to the continuing cautious market environment.

COMPANY BRIEFS

• Eastern & Oriental Bhd (E&O) has formally signed a RM1.08 bln contract with China Communications Construction Co (M) Sdn Bhd (CCCC (M)) for the latter to undertake reclamation works for the Seri Tanjung Pinang Phase 2 (STP2) project in Penang. Mobilisation of works for the STP2 is targeted to commence at the end of January 2016. (The Edge Daily)
• Roofing product maker Astino Bhd expects revenue to drop between 8.0% and 10.0% in FY16 due to weak demand. The company’s international and local orders has slumped by 10.0% in 2QFY16 and expects demand to fall further through the remaining quarters. (The Edge Daily)
• Global Oriental Bhd’s wholly owned subsidiary, Johan Awana Sdn Bhd has teamed up with Menteri Besar Incorporated (Perak) (MB Inc) through a development rights agreement (DRA) to develop a mixed development in Manjung, Perak. The parcel of land, measuring 147.8 ac., is owned by MB Inc and the project is expected to generate a gross development value of RM900.0 mln. (The Edge Daily)
• MRCB-Quill REIT's (MQReit) 4Q2015 net property income jumped 99.7% Y.o.Y to RM13.4 mln due to higher income contribution from Platinum Sentral and higher interest income. Revenue for the quarter gained 79.2% Y.o.Y to RM32.6 mln.
• For 2015, cumulative net property income rose 69.3% Y.o.Y to RM90.3 mln. Revenue for the year added 63.9% Y.o.Y to RM115.2 mln. A final distribution per unit (DPU) of 4.4 sen for 4Q2015, payable on 29th February 2016, was declared. This brings total DPU for 2015 to 8.47 sen. (The Edge Daily)
• Express bus operator KBES Bhd saw some 22.4 mln of its shares, which represented a 17.8% stake in the company, traded off-market on 22nd January, 2016 for RM11.2 mln.
• KBES shares were moved in a direct business transaction block at 50 sen per share, 11.5 sen higher than its last-traded price of 38.5 sen. However, it is not immediately known who the parties involved in the transactions were. (The Edge Daily)
• TMC Life Sciences Bhd’s 2QFY16 net profit rose 44.7% Y.o.Y to RM3.3 mln, helped by improvements in the patient load and interest income. Revenue for the quarter added 24.7% Y.o.Y to RM31.3 mln.
• For 1HFY16, cumulative net profit jumped 106.7% Y.o.Y to RM6.2 mln. Revenue for the period increased 27.1% Y.o.Y to RM61.4 mln. (The Edge Daily)
• Seacera Group Bhd's Group Managing Director, Zulkarnin Ariffin has increased his direct and indirect stakes in the company to 21.1% and 4.9%, respectively.
• Zulkarnin raised his shareholdings after he acquired 358,400 shares that represent a 0.2% interest in the company on 22nd January 2016 at RM1.03 per share. (The Edge Daily)
• Instacom Group Bhd has changed its name to Vivocom Intl Holdings Bhd and its securities will be traded and quoted under the new name on 27th January 2016. However, the stock number remains unchanged. (The Edge Daily)
• Shell Refining Company (Federation of Malaya) Bhd has clarified earlier reports over a share acquisition by Shandong Hengyuan Petrochemical Co Ltd (SHP), saying that its major shareholder, Shell Overseas Holdings Ltd (SOHL) is in discussions with SHP. The board was informed that whilst SOHL is considering a sale of its shares in the company, no agreement for the sale of its shares has been reached with SHP or any other party. (The Edge Daily)
• Bintai Kinden Corp Bhd’s 69.8% owned subsidiary, Bintai Kindenko Pte Ltd has won a 167.0 bln Vietnam Dong (RM31.9 mln) contract from Hoa Binh Construction & Real Estate Corp to provide air-conditioning and mechanical ventilation (ACMV) system for phases two and three of the Saigon Centre in Ho Chi Minh City, Vietnam.
• The scope of work of the project includes tower development works from the Interlink building to the existing building and is estimated to be completed by November 2017. (The Star Online)
• SapuraKencana Petroleum Bhd has scrapped its proposed purchase of Petronas Carigali Sdn Bhd’s assets in Vietnam for US$400.0 mln (RM1.71 bln) by mutual agreement.
• The transaction was expected to be completed by end of January 2016. However, since the agreements were signed, oil prices have plunged by more than half. (The Star Online)

Source: M+ Online Research - 26 Jan 2016