The FBMKLCI (+0.8%) traded in the positive territory for most of yesterday’s trading session as investors were granted a respite from the potential U.S. interest rate hike in June, as well as stronger crude oil prices amid the dwindling oil glut. The FBM Fledging (+0.4%), however was the only outperformer among the lower liners, while the broader market closed mostly higher with the exception of the Construction (-0.1%), Technology (- 0.2%) and the Properties (-0.2%) sectors.

Market breath turned negative as losers outweigh the gainers on a ratio of 432-to- 345 stocks. Traded volume fell slightly by 1.6% to 1.28 bln shares amid the uncertainties surrounding the global growth.

On the main board, BAT (+86.0 sen) extended its gains for the second straight trading day, while, Genting (+18.0sen), Kuala Lumpur Kepong (+18.0 sen), Axiata (+17.0 sen) and Petronas Dagangan (+16.0 sen) were the other key index advancers. Meanwhile, PIE Industrial (+50.0 sen), Dutch Lady (+36.0 sen), Thong Guan Industries (+31.0 sen), Huat Lai Resources (+20.0 sen), and Batu Kawan (+16.0 sen) advanced.

On the other hand, significant losers were United Plantations (-76.0 sen), Panasonic Malaysia (-30.0 sen), Hartalega Holdings (-20.0 sen), Far East Holdings (-14.0 sen) and Warisan TC Holdings (-14.0 sen). On the key index, selective banking and O&G heavyweights led the decliners - Hong Leong Financial Group, Petronas Gas and Telekom Malaysia dropped 4.0 sen each while, Public Bank and Sapura Kencana Petroleum both fell by 2.0 sen each.

Asian key indices were mostly painted in red after the soft U.S. job data dampened expectations of an interest rate hike in June. The Nikkei slipped 0.4% on worries that the stronger Yen might hurt the competitiveness of Japanese exporters while, the Shanghai Index fell 0.2%. The Hang Seng, however, rose 0.4%, buoyed by gains in commodity-related stocks. ASEAN stockmarkets closed mixed on Monday.

U.S. stockmarkets advanced after investors digested that higher interest rates were imminent, albeit not in June. The Dow was 0.6% up, while the S&P500 (+0.5%) hit a seven-month high to close at 2,109.4 points. Similarly, the Nasdaq rose 0.5%.

European benchmark indices finished on a slightly positive note ahead of Federal Reserve Chairperson’s speech in Philadelphia and the rally in mining stocks like Anglo American (+11.1%) and Rio Tinto (+6.4%). The FTSE was 1.0% higher while, the DAX rose 0.2%. After a choppy trading session, the CAC (+0.04%) closed flattish at 4,423.4 points.

THE DAY AHEAD

Yesterday’s bargain hunting activities were stronger than expected as domestic funds continue to take-up positions in some of the beaten down index heavyweights to send the key index near to the 1,650 resistance level. The stronger recovery is also helping to shore up the near term market sentiments and we think the recovery process is likely to continue, albeit the bargain hunting activities are likely to become more selective after the recent gains and the uptrend could be more measured.

Still, we expect the 1,650 level to be cleared, but the 1,660 level could be more difficult to penetrate unless there are further fresh market catalysts. In the interim, the key index’s recovery could be led by renewed interest on oil and gas stocks as oil prices have reached its highest level is almost a year. In addition, we also think banking stocks could see increased interest on expectations that the next U.S. interest rate hike may still be sometime away.

Interest on the lower liners and broader market shares, meanwhile, will remain selective amid the lack of fresh leads and this also means that retail investors will continue to favour trading strategies rather than buy-and-hold strategies.

COMPANY BRIEFS

Muhibbah Engineering (M) Bhd has entered into an agreement with Perbadanan Setiausaha Kerajaan Pahang for the proposed acquisition of a piece of land in Kuantan, Pahang for RM26.5 mln. The land would be developed into the Kuantan Maritime Hub over 10 years. The proposed acquisition would be funded with internal funds and there are no liabilities including contingent liabilities and guarantees to be assumed from the proposed acquisition. (Bernama)

KUB Malaysia Bhd (KUB) has signed a share acquisition agreement to sell its subsidiary, KUB Precast Sdn Bhd to Jeks Precast Sdn Bhd for RM19.0 mln. The disposal price was arrived at after taking into account KUB Precast’s financial position, existing market position and future prospects. KUB Precast, whose products include precast concrete slabs, reported a pretax loss of RM5.3 and RM1.2 mln in 2015 and 1Q2016 respectively. (Bernama)

Nexgram Holdings Bhd’s special auditor, Ferrier Hodgson MH Sdn Bhd (FHMH) requires an additional three-to-four weeks to submit its first draft report to the Board of Directors. The initial targeted date for FHMH to deliver their first draft report was on 31st May 2016. The delay in delivering the first draft report was mainly due to substantial time taken by the company in compiling the information and documents recently requested by FHMH. Earlier in March 2016, Nexgram has appointed FHMH to carry out independent verification over certain assets within Nexgram group such as cash and bank balances and pre-development costs. (The Star Online)

Global Oriental Bhd (GOB) has proposed to acquire a 279.9-ac. of land in Bentong, Pahang for RM170.7 mln, for a potential resort-like residential and commercial development. GOB’s 51%-owned subsidiary Sering Manis Sdn Bhd had signed a conditional agreement with Panji Selera Sdn Bhd to buy the land, which it said was surrounded by lush greenery and in close proximity to Genting Highlands. The freehold land is about 4 km from the turn-off to the Genting Highlands and 11km from the peak of Genting Highlands. (The Star Online)

WZ Satu Bhd's wholly-owned unit, WZS KenKeong Sdn Bhd has bagged a RM43.0 mln subcontract from Menuju Asas Sdn Bhd to upgrade the federal road between Teluk Intan and Kampung Lekir, Perak. The job at Lebuhraya Persisiran Pantai Barat would last for 24 months, beginning 10th June 2016. (The Edge Daily)

Sime Darby Bhd’s disputes relating to an oil and gas platform project in India will be referred to arbitration. The group’s subsidiary, Sime Darby Engineering Sdn Bhd (SDE) and Swiber Offshore Construction Ptd Ltd, have issued a notice of invocation of arbitration to India's state-owned Oil & Natural Gas Corporation Ltd (ONGC).

The SDE-Swiber consortium was awarded a US$618.4 mln (about RM2.54 bln) contract for the wellhead platform project in western India by ONGC in 2010. Disputes and differences relating to the process platform project have since arisen between the consortium and ONGC. (The Edge Daily)

Malayan Banking Bhd (Maybank) has appointed its Group Global Banking Head Datuk Amirul Feisal Wan Zahir as Group Chief Financial Officer (CFO). Concurrently, current Group Chief Financial Officer Datuk Mohamad Rafique Merican will be appointed as Maybank Islamic Chief Executive Officer (CEO), replacing Datuk Muzaffar Hisham who will take over the Group Global Banking Head position. All appointments are effective 1st July 2016.

The rotation of portfolios is meant to address three objectives; (i) to strengthen and improve the new roles assumed by the leaders bringing new ideas and heightening energy, (ii) for the continuous development in leadership skills of the appointees which also applies to all Maybankers under their own personal development plans, and (iii) to strengthen Maybank Group's Leadership bench strength. (The Edge Daily)

The Malaysian government, via the Minister of Finance Inc's 99.99%-owned unit GOVCO Holdings Bhd, plans to take up 1.25 bln new Redeemable Convertible Cumulative Preference Shares (RCCPS) issued by DRB-Hicom Bhd’s wholly-owned subsidiary, Proton Holdings Bhd for RM1.25 bln cash. The RCCPS carries a par value of 1.0 sen each and will be issued at an issue price of RM1.00, a premium of 99 sen to its par value.

A dividend of 4.0% shall be declared by Proton per annum on a cumulative basis for the RCCPS, which carries a conversion ratio of 1 unit of RCCPS-to-1.152 units of Proton shares. The RCCPS will have tenure of up to 15 years after the issuance date. The proposed RCCPS issuance is expected to be completed by 7th June 2016. (The Edge Daily)

Source: M+ Online Research - 7 June 2016