The FBMKLCI (+0.4%) closed higher last Friday, buoyed by buying interest in selective telco heavyweights as well as improved crude oil prices and the strengthening of the Ringgit vs. the Greenback. The key index, however, fell 0.04% W.o.W, ending its two-week winning streak. The FBMACE (-0.4%) bucked the general positive trend among the lower liners to finish lower, while the Consumer Products (-0.01%) and the Industrial (-0.5%) sub-indices underperformed the broader market.

Market breath turned positive as advancers outpaced the decliners on a ratio of 402-to-342 stocks. Traded volume fell 25.6% to 1.3 bln shares as investors remained cautious ahead of the U.S. job report announcement.

Key index leaders were BAT (+12.0 sen), Genting (+11.0sen), Axiata Group (+11.0 sen) and banking heavyweights such as AMMB Holdings (+12.0 sen), Hong Leong Financial Group (+10.0 sen). Meanwhile, Dutch Lady (+94.0 sen), KESM Industries (+74.0 sen), Shangri-La (+33.0 sen), Kluang Rubber (+21.0 sen) and F&N (+16.0sen) were the significant advancers amongst stocks in the broader market.

On the contrary, broader market constituents - Goldis, Huat Lai Resources and Scientex shed 12.0 sen each, while, Apex Healthcare and Asia File Corporation lost 15.0 sen each. There were only five losers on the main board which includes PPB Group (-10.0 sen), Sime Darby (-8.0 sen), Petronas Gas (-8.0 sen), MISC (-5.0 sen), and Astro (-4.0 sen).

Japanese stockmarkets snapped it's twoday losing streak as the Nikkei rose 0.5%, led by gains in the Fishery, Retail and Chemical, Petroleum & Plastic sectors. The Hang Seng Index (+0.4%) closed at a five-week high despite the overall depressed mainland stockmarket outlook due to weaker-than-expected economic data, while the Shanghai Composite Index was up 0.5% amid expectations of the inclusion of China's A-shares into the MSCI's emerging market index. ASEAN indices closed mostly higher last Friday.

Wall Street declined last Friday as the Dow slipped 0.2% after the disappointing May employment data cast doubts over a potential interest rate hike in June. On the broader market, the S&P 500 and the Nasdaq fell 0.3% and 0.6% respectively. Banking stocks such as Goldman Sachs (-2.3%) tanked, albeit offset by mining stocks as investors seek out safe-haven assets amid the global uncertainties.

European benchmark indices ended mostly in the negative zone as the major slowdown in the U.S. job markets fuelled worries about global growth. Despite erasing some of its earlier gains, the FTSE expanded 0.4% to close at 6,209.6 points, while both the DAX and the CAC lost 1.0%.

THE DAY AHEAD

We think that the FBM KLCI will continue to make some headway as the bouts of buying support returns amid the decreasing foreign selling. Market sentiments could also helped by the reduced possibility of a rate hike later this month after U.S. non-farm payroll grew less-than-expected; thereby prompting further bargain hunting activities.

Still, we continue to think that the upsides will be limited amid the lack of positive domestic catalysts and the largely cautious environment ahead of the upcoming FOMC meeting and the U.K’s Brexit referendum. Therefore, the 1,640-1,650 levels remain the main near term targets for now, while the 1,630 level will serve as the intermediate support. Selective and rotational plays on the broader market and lower liners will still be prevalent, but retail players could still opt to be on the cautious side and this will keep market breadth on the lower side.

COMPANY BRIEFS

Sime Darby Bhd has proposed to dispose of a 10.0% stake in Eastern & Oriental Bhd (E&O) to Paramount Spring Sdn Bhd for RM342.0 mln as part of its asset monetisation plan. E&O Group’s Managing Director, Datuk Seri Terry Tham Ka Hon is an indirect substantial shareholder Paramount Spring. The 10.0% stake comprises 125.9 mln ordinary shares and 48.7 mln convertible warrants valued at RM2.60 and 30 sen respectively.

Sime Darby remains a shareholder of E&O with a stake of 12.2% after the above disposal and will continue to have board representation in the property developer. The disposal consideration was above Sime Darby’s average cost of investment of approximately RM2.05 per share. (The Star Online)

Scomi Engineering Bhd (SEB) has proposed to acquire a 42.3% stake in Brazil-based Quark Fabricacao De Equipamentos Ferroviarios E Servicos De Engenharia Ltda (Quark) for 20.0 mln Real (RM23.1 mln). The proposed acquisition is in line with SEB’s market strategy for Brazil and the Americas. It will also support SEB’s strategic plan of setting up its manufacturing plant in Sao Paulo. (Bernama)

CAB Cakaran Corporation Bhd has decided against acquiring the assets of Farm Best Food Industries Sdn Bhd (FBF) on its own. Instead, CAB Cakaran will collaborate with three other parties to acquire the entire shareholding of FBF for RM9.5 mln. The company, which first announced the proposed acquisition on 5th February 2016 5, gave notice of the termination in a filing with Bursa Malaysia on 3rd June 2016. CAB Cakaran had also been refunded the RM1.6 mln deposit placed for the proposed corporate exercise by FBF. (Bernama)

S P Setia Bhd has proposed a rights issue of up to 1.07 bln new Islamic Redeemable Convertible Preference Shares (RCPS-i) at an issue price of RM1.00 each, on the basis of two RCPS-i-for-every five existing shares.

The RCPS-i will carry the right to receive preferential dividends at the expected rate of 6.49% p.a. The RCPS-i will be convertible at the option of its holders on a ratio two new S P Setia shares-for-every seven RCPS-i. (The Edge Daily)

Mega First Corp Bhd's Executive Chairman, Goh Nan Kioh has ceased to be a substantial shareholder in Jadi Imaging Holdings Bhd. Goh and a few other related parties had disposed of 39.0 mln shares, or a 4.1% stake in Jadi Imaging held through Mega First between 26th February 2016 and 26th April 2016.

After the disposal, Goh still holds some 41.0 mln shares, or a 4.3% stake in Jadi Imaging via Mega First. (The Edge Daily)

CIMB Group Holdings Bhd and Sompo Japan Nipponkoa Holdings Inc have entered into a strategic non-life bancassurance partnership for Southeast Asia.

Following the execution of in-country agreements, CIMB will distribute Sompo's non-life insurance products through its extensive distribution network consisting of the group's branches, call centres and online channels in selected countries within the region. (The Edge Daily)

Canned food and beverage maker, Rex Industry Bhd has surfaced as a substantial shareholder in Hwa Tai Industries Bhd, with a 5.6% stake. Rex Industry has acquired 4.2 mln shares in the company on the open market on 3rd June 2016. The transaction price and identity of the seller, however, were not disclosed. (The Edge Daily)

Hap Seng Consolidated Bhd, which will be included as a component stock of the FBM KLCI from 20th June 2016 onwards, will increase its share capital to RM2.45 bln with effect from 6th June 2016. This follows the conversion of some warrants into 111.6 mln shares at an issue price of RM1.65 each, increasing its share capital to 2.45 bln shares. (The Edge Daily)

Alam Maritim Resources Bhd is bidding for RM2.60 bln worth of jobs as the company grapples with low charter rates and vessel utilisation rates amid a dearth of demand for oil and gas (O&G) service vessels.

The contracts it is bidding for consist of local and overseas jobs, ranging from offshore support vessels, subsea services and offshore installation and construction. The group is also looking for new opportunities in Thailand, Vietnam, Myanmar and Indonesia. (The Edge Daily)

Source: M+ Online Research - 6 June 2016