The FBM KLCI started off the week on a weak footing as the key index endured sharp selling pressures from the continuing fallout of the Brexit vote decision. However, the key index managed to recouped most of its intraday losses before closing 0.3% lower yesterday. The lower liners remain in the red, but the Industrial Products (+0.5%), Plantations (+0.2%) and Mining (+0.4%) sectors outperformed the negative broader market.

Market breadth stayed negative as losers outpaced gainers on a ratio of 457-295 stocks. Traded volumes shrunk 43.1% to 1.27 bln shares as investors retreated to the sidelines amid the volatile market condition.

Petronas Dagangan (-22.0 sen) led the decliners list on the FBM KLCI, followed by IHH (-20.0 sen), Hap Seng Consolidated (-15.0 sen) and CIMB (-8.0 sen). Topping the losers list on the broader market were Panasonic (-30.0 sen), Lafarge (-23.0 sen), Petron Malaysia (-22.0 sen) and Kein Hing (-12.0 sen). REDtone dipped 3.5 sen after reporting a net loss of RM23.5 mln in its 4QFY16 earnings.

Amongst the biggest gainers on the broader market include Ajinomoto (+36.0 sen), Batu Kawan (+26.0 sen), Microlink Solutions (+20.0 sen), Far East Holdings (+18.0 sen) and Top Glove (+17.0 sen). Key winners on the big board were Petronas Gas (+18.0 sen), Genting (+10.0 sen), Public Bank (+8.0 sen), Petronas Chemicals (+6.0 sen) and Astro (+2.0 sen).

Asia benchmark indices closed mostly higher as the Nikkei (+2.4%) rebounded to reclaim the 15,000 psychological level after the Japanese government said it was ready to intervene to stabilise the Yen post-Brexit. The Shanghai Composite Index (+1.5%) recovered most of its previous session losses, but the Hang Seng Index fell 0.2%. ASEAN stockmarkets, meanwhile, ended mixed.

U.S. key benchmark indices closed lower on Monday as aftershocks from Britain’s exit from the European Union reverberated across global stockmarkets. On the main market, the Dow slipped 1.5% as banking heavyweights such as American Express and JPMorgan Chase and Co. slumped. Meanwhile, the lower liners and broader market barometer – the S&P 500 lost 1.8% as eight-out-of-ten of its main sectors fell, while the Nasdaq retreated 2.4% to closed at 4,594.4 points.

European stockmarkets were splashed in red as panic selling continues after the Brexit was announced, alongside the crash in Pound Sterling to its lowest levels in three decades. The FTSE shed 2.6%, dragged down by banking stocks, albeit slightly offset by mining stocks as the gold price strengthened. Meanwhile, the CAC (-3.0%) and DAX (-3.0%) also plunged. Following the Brexit, Standard & Poor’s (S&P) retracted United Kingdom’s AAA status, downgrading it by two notches due to the country’s long-term negative outlook.

THE DAY AHEAD

Global equity markets continue to be rocked by the fallout from the Brexit vote with sentiments turning bearish amid the confusion over how the United Kingdom and the European Union should proceed with the unprecedented withdrawal from the latter bloc as well as its credit rating downgrade. This is also leaving investors jittery over a potentially messy withdrawal, thus the flight to safety is likely to continue over the near term.

Although there will be little-to-no immediate effect on the Malaysian economy, Bursa Malaysia stocks will continue to be affected by dour overseas sentiments. Consequently, we expect the FBM KLCI to maintain its downward bias over the near term with the 1,620 level staying the immediate support for now, before the critical support of 1,600 points level comes into play.

In the same vein, we also expect market breadth to remain on the negative side as more investors are likely to trim their positions and retreat to the sidelines until market stability returns.

COMPANY BRIEFS

Tadmax Resources Bhd is planning to dispose its affordable housing project, together with other common facilities, to Labuan Corporation (PL) for about RM50.0 mln.

The group has signed a sale and purchase agreement (SPA) with PL for the en bloc sale of Block C, Phase II housing development, known as Ganggarak Permai, which includes 260 units of affordable residential apartments, with common facilities. The apartments consist of two different layout types and sizes, measuring 800 sq. ft. and 850 sq. ft. per unit respectively.

A 10.0% deposit on the execution of the SPA will be paid, while the remainder of the total disposal consideration shall be paid by progress payment agreed upon in the SPA.

Including the above proposed disposal, Tadmax has cumulatively sold 780 units of affordable residential apartments in Ganggarak Permai since it was launched in April 2015. (The Edge Daily)

Selangor Properties Bhd has reported a net loss of RM16.9 mln in 2QFY16, from a net profit of RM7.1 mln a year earlier, dragged by weaker performance across all business segments, with the exception of its property investment. However, revenue for the quarter rose 31.6% Y.o.Y to RM30.0 mln, compared to RM22.8 mln previous corresponding period.

Its 1HFY16 net loss was at RM33.0 mln, from a net profit of RM65.2 mln a year ago, attributed to weaker performance of its investment holdings segment and a result of forex losses. Again, the revenue was higher at RM60.2 mln, from RM47.1 mln in 1HFY15.

Selangor Properties expects its investment properties in Menara Milenium in Damansara Heights and Claremont Shopping Centre in Perth, Australia to continue to enjoy high occupancy rates and it also plans to launch a high-end 18- storey condominium in Damansara Heights in the 2H2016.

Meanwhile, the group has suspended sales of its property development project in Bukit Permata, mainly due to sluggish economic environment and stricter bank lending guidelines. However, the project may be relaunched in early 2017 if the property market sentiment recovers.

On its Damansara Heights' landbank, the group has announced that it is in its initial planning stage, with considerations on design which will provide integration and connectivity with the surrounding Mass Rapid Transit (MRT) project. (The Edge Daily)

MMC Corp Bhd and its joint-venture partner for the Klang Valley Mass Rapid Transit (KVMRT) project, Gamuda Bhd, are being sued for over RM300.0 mln for allegedly infringing a land acquisition contract.

The lawsuit against the jointly-controlled entity, MMC Gamuda KVMRT (PDP) Sdn Bhd, was filed by Accolade Land Sdn Bhd and is not expected to have a significant financial and operational impact on the group for the financial year ending 31st December, 2016. (The Star Online)

Genting Plantations Bhd (GENP) is purchasing 21,995 ha. of land in Indonesia, through the acquisition of two companies, mainly Cahaya Agro Abadi Pte Ltd (CAA) and Palm Capital Investment Pte Ltd (PCI) for a cumulative purchase price of US$42.2 mln. GENP’s 73.7%- owned subsidiary, PalmIndo Holdings Pte Ltd, inked two agreements with Green Palm Capital Corp, a related party, to acquire the two loss-making companies and intends to fund the contracts via internally-generated funds and external financing.

Including the proposed acquisition, the group’s combined plantation landbank in Malaysia and Indonesia will increase to 260,371 ha. from its present 238,376 ha. The proposed acquisitions are expected to be completed in the 3Q2016. (The Edge Daily)

Ahmad Zaki Resources Bhd has secured a RM152.3 mln contract to build a new bridge across Sungai Kuantan, which is located in Pahang, from the Public Works Department (JKR) on 24th June 2016. (The Edge Daily)

SapuraKencana Petroleum Bhd has entered into an agreement to sell gas produced from its SK310 B15 gas field to Petroliam Nasional Bhd (Petronas) on 23th June 2016.

The gas field, which was discovered in December 2010, is located within the SK310 Production Sharing Contract (PSC) area, offshore East Malaysia.

SapuraKencana holds a 30.0% shareholding in the PSC, while it’s other partners, Petronas Carigali Sdn Bhd and Mitsubishi Corporation's subsidiary, Diamond Energy Sarawak Sdn Bhd owns 40.0% and 30% equity stake respectively. (The Star Online)

Seremban Engineering Bhd has announced the resignation of its Chief Executive Officer, Chuah Cheong Jin as he has to attend to his other business commitments.

Chuah, who joined the company on 9th July 2015, has 25 years of experience in steel fabrication business and metalbased industry.

Prior to joining the group, Chuah also served as a project manager at SapuraKencana Pinewell Sdn Bhd, a subsidiary of SapuraKencana Petroleum Bhd. (The Edge Daily)

Tomypak Holdings Bhd‘s corporate exercise, which includes a rights issue of 54.7 mln rights shares, along with the corresponding number of warrants, was oversubscribed by 29.4%.

The 54.7 mln rights shares and 54.7 mln warrants are expected to be listed on the Main Market of Bursa Malaysia on 5th July 2016.

The proceeds from the corporate exercise worth RM54.7 mln will be used to fund the construction of a new factory building, purchase of machineries, equipment and other ancillary facilities, and working capital. (The Edge Daily)

Source: M+ Online Research - 28 June 2016