Following the weakness across the regional stockmarkets, the FBM KLCI (- 0.8%) hovered in the negative territory for the entire day as banking and energyrelated heavyweights took a beating. Both the broader market and the lower liners slumped as sentiments turned weaker despite the Fed delaying its interest rate hike.

Market breadth stayed negative as losers thumped gainers on a ratio of 591-to-195 stocks. Traded volumes improved marginally by 2.5% to 1.57 bln shares as foreign selling intensified following the insipid outlook on global economic growth.

BAT (-RM1.44) remained as the biggest decliner on the key index, followed by MISC (-25.0 sen) after losing 3.3%, its largest fall seen in five-weeks. Genting (- 17.0 sen), CIMB (-14.0 sen) and Petronas Chemicals (-13.0 sen) were other heavyweight decliners. Significant losers on the broader market include Lafarge Malaysia (-29.0 sen), Scientex (-26.0 sen), Ajinomoto (-22.0sen) and MSM (- 21.0sen). Meanwhile, United Plantations lost 48.0 sen, on the back of weaker crude palm oil prices.

In contrast, Calsberg (+18.0 sen), Batu Kawan (+12.0 sen), Thong Guan Industries (+10.0 sen), Kerjaya Prospek (+9.0 sen) and F&N (+8.0 sen) were amongst the biggest gainers on the broader market. There were only five advancers on the FBM KLCI – Petronas Dagangan (+4.0 sen), Tenaga (+2.0 sen), DIGI (+1.0 sen), KLCC (+1.0 sen) and YTL (+1.0 sen).

Japanese stockmarkets tanked as the Nikkei plunged 3.1% after the Bank of Japan abstained from adding any monetary stimulus, while the Yen surged to its highest-level since August 2014. The Hang Seng index traded mostly in the negative territory, closing lower by 2.1% as it was dragged lower by selective banking and energy stocks, while the Shanghai Composite index decreased 0.5%. Asean stockmarkets were also mostly in the red at yesterday’s closing.

US stockmarkets snapped a five-session streak of declines as utilities and telecommunication stocks rallied despite the global uncertainties. The Dow rose 0.5%, while the Nasdaq inched up 0.2% forward. The S&P500 increased 0.3% despite the energy sector bucking the general positive trend to close lower, in-line with weaker crude oil prices.

Despite erasing some of its earlier losses, European key benchmark indices finished in the red as investors leave the equity markets to search for safe-haven assets after the Bank of England decided to leave its interest rate unchanged ahead of U.K.’s Brexit referendum next week. The FTSE slipped 0.3% as mining-related counters such as Randgold Resources (+4.8%) offset the downturn in banks. Meanwhile, the CAC dropped 0.5% and the DAX erased 0.6% to close at 9,550.5 points.

THE DAY AHEAD

Yesterday’s slide was a contrast to our expectation of a follow through buying interest amid the uncertainties over the ongoing global economic issues. However, we think that stocks on Bursa Malaysia are likely to post a modest rebound to end the week as a technical rebound is already due after the recent steep falls.

At the same time, the recovery on Wall Street will also provide some catalyst, as with the Brexit polls indicating that Britons are more likely to vote to remain in the European Union in next week’s referendum.

We think the FBM KLCI could rebound to the 1,620 levels for over the near term and if the bargain hunting continues, the key index could target the 1,630 next. On the downside the 1,600 points level is the major support.

COMPANY BRIEFS

Logistics services provider, Xin Hwa Holdings Bhd will continue to acquire and expand its existing fleet of 1,172 vehicles as a part of the company’s ongoing expansion plan. The company is looking at purchasing at least 30 to 40 vehicles, including trucks, prime movers and trailers. (Bernama)

Printed circuit boards manufacturer AE Multi Holdings Bhd is venturing into renewable energy industry with a proposed investment of RM140.0 mln in a tie-up with JMT Kelantan Baru Sdn Bhd, a designer, constructor and operator of mini hydro-power plants.

AEM signed a Heads of Agreement with JMT on 16th June 2016 whereby AEM will be granted the rights from JMT to operate and maintain two 10 megawatt (MW) integrated flood mitigated mini-hydro power project in Joh Labok and Temangan in Machang, Kelantan.

AEM shall be entitled to 80% of the total profit from the sale of power to Tenaga Nasional Bhd under the renewable power purchase agreements (REPPAs) signed between JMT and the power company. (The Star Online)

The Employees Provident Fund (EPF) has emerged as a substantial shareholder in DKSH Holdings (Malaysia) Bhd with a 5.0% stake. EPF is now holding 7.9 mln shares, or a 5.02% stake in the company, following the latest acquisition. EPF had acquired 371,100 shares on 9th June 2016 for an undisclosed amount. (The Edge Daily)

Emir Oil LLP, the target of a proposed qualifying asset (QA) acquisition by Reach Energy Bhd, has found oil and gas bearing reservoirs in its first exploration well in the Aidai Block in the southwestern region of Kazakhstan. The drilling of the well was completed in June 2015. It reached a total depth of 5,080 m and confirmed the presence of oil and gas bearing reservoirs in Triassic formation. The well is the group's deepest well to date with drilling cost of about US$10.0 mln. (The Edge Daily)

Downstream oil and gas player KNM Group Bhd said it is focusing on improving its income base and to generate more recurrent revenue amid the uncertain global economic environment. The group, which currently derives its entire income from contracted works, expects to see up to 15.0% of its topline to be contributed by recurrent income in 2017.

Traditionally, KNM has secured its revenue from contracting works and it is embarking into more recurring income projects, such as biofuel and waste-to-energy. By end-2016, its bioethanol plant in Thailand will start production and should generate recurrent income. (The Edge Daily)

Press Metal Bhd is targeting a RM6.00 bln turnover for 2016. Its optimism is based on the current prices of aluminium for 2016, which should stay about the same as last year. Following the completion of its Phase 3 aluminium smelter in Sarawak, Press Metal's smelting capacity will rise to 760,000 tonnes p.a., 1.5% of global primary aluminium production. Going forward, Press Metal plans to extend the value chain of its operations to include more mid-stream products such as billets and alloy wheel ingots to add more value and enhancing its profit margin. (The Edge Daily)

Mudajaya Group Bhd has submitted RM8.00 bln worth of construction tenders in 2016, of which RM3.00 bln is related to power plant construction, a specialised field it is in and has few competitions. The majority of the projects that the group has bid for are in Malaysia.

Apart from power plants, the bids are for packages in major infrastructure projects such as the Sarawak portion of the Pan Borneo Highway, the second line of Klang Valley Mass Rapid Transit (MRT Line 2), the third phase of light rail transit (LRT3), and the West Coast Expressway (WCE). (The Edge Daily)

Mah Sing Group Bhd is exploring more land acquisition and joint venture (JV) opportunities with the federal government, as well as state governments, to grow its earnings.

For now, Mah Sing's Kota Kinabalu Convention Centre mixed development in Sabah was the only project undertaken in collaboration with the government. (The Edge Daily)

Source: M+ Online Research - 17 June 2016