The FBM KLCI snapped its streak of two consecutive days of losses as the key index pared off its intraday losses to close 0.3% higher, mainly due to the mid-year window dressing activities as well as the recovery among regional markets. The lower liners also closed in the green amid a mostly positive broader market, with the exception of the Plantations sector, which bucked the general positive trend to close a marginal 0.04% lower.

Market breadth turned positive as winners outnumbered losers on a ratio of 528-to- 268 stocks. Traded volumes rose 16.0% to 1.47 bln shares as investors swooped in to acquire some undervalued shares after the recent selldown.

Significant key index leaders include RHB Bank (+15.0 sen), which started its first day trading on the Main Market of Bursa Malaysia, followed by Astro (+14.0 sen), PPB (+14.0 sen) and Genting Malaysia (+12.0 sen). SapuraKencana Petroleum jumped +10.0 sen after the group announced it has secured RM153.0 mln worth of new contracts. The broader advancers include F&N (+28.0 sen), Kawan Food (+20.0 sen), Panasonic Manufacturing (+20.0 sen), Shangri-La Hotels (+20.0 sen) and Triplc (+19.0 sen).

On the contrary, broader market decliners were United Plantations (-40.0 sen), Lay Hong (-21.0 sen), Batu Kawan (-16.0 sen), Malaysia Airport Holdings (-15.0 sen) and Ajinomoto (-10.0 sen). The laggards on the Main Board were mostly dominated by financial-related stocks such as Public Bank (-10.0 sen) and Hong Leong Financial Group (-4.0 sen), while, other key index losers were BAT (-76.0 sen), Petronas Chemicals Group (-4.0 sen) and MISC (-3.0 sen).

Asian key benchmark indices were mostly higher on Tuesday’s closing as the selling pressure ebbed despite the Brexit uncertainties. The Nikkei rose slightly with a 0.1% gain after a choppy trading session. Meanwhile, the Hang Seng Index extended its three-straight sessions with losses of 0.3%, while the Shanghai Composite Index inched 0.6% higher. ASEAN stockmarkets, meanwhile, ended mostly in the green zone.

U.S. stockmarkets rallied for the first time since the Brexit referendum amid bargain-hunting activities and better-than-expected U.S. economic data. All but one counter on the Dow (+1.6%) rose, with banking stocks leading the heavyweight advancers. Meanwhile, the S&P 500 and the Nasdaq gained 1.8% and 2.1% respectively. This comes after the U.S. economy grew 1.1% Q.o.Q in 1Q2016, surpassing the previously estimated growth of 0.8% Q.o.Q.

Taking cue from the favorable closing on Asian stockmarkets, key European benchmark indices also rebounded despite the downgrade to U.K. sovereign credit by both the S&P and Fitch. The FTSE (+2.6%) close above the 6,000 psychological level as financial-related companies climbed after being hit the most in the recent stockmarket rout. U.K.’s Life Insurance Index jumped 6.4% after Prudential PLC rose 7.7%, its biggest intra-day gain since late 2011.Meanwhile, the CAC (+2.6%) and DAX (+1.9%) also made substantial gains.

THE DAY AHEAD

We think global markets are temporarily casting aside the Brexit uncertainties after the recent rout that has left many indices oversold. Therefore, equities are on a recovery phase to adjust from technical oversold and we expect the similar trend to remain over the near term on Bursa Malaysia as mild bargain hunting activities are likely to prevail.

At the same time, bouts of window dressing activities will also take place and this will also help to lift the market slightly with the 1,640 level the immediate target, while the 1,620 level will remain the main intermediate support level for now.

On the whole, however, we think that market breadth will stay on the low side as most investors are still wary over the continuing Brexit uncertainties and are likely to adopt quick profit taking strategies.

COMPANY BRIEFS

Tropicana Corp Bhd has appointed Japan-based Panasonic Group's subsidiary PanaHome Malaysia Sdn Bhd as turnkey contractor for the third phase of its RM12.4 bln Tropicana Aman township in Selangor.

The RM168.0 mln turnkey project includes the construction of, as well as the provision of smart home technology to 272 semi-detached houses in Cheria Residences, which is located in the township. The third phase is expected to be completed by 2019. (The Edge Daily)

Eco World Development Group Bhd‘s 2QFY16 net profit jumped by almost threefold to RM34.7 mln, from RM11.8 mln in the 2QFY15, while revenue rose 47.1% Y.o.Y to RM614.6 mln, form RM471.8 mln in the previous corresponding period. The improved performance was due to stronger sales, in addition to the recognition of a higher percentage of completed works on its ongoing contracts.

Its cumulative 1HFY16 net profit also surged 372.3% Y.o.Y to RM55.3 mln, in comparison to RM14.9 mln a year ago, mainly due to higher revenue contribution at RM1.08 bln, from RM575.8 mln a year earlier. (The Star Online)

JAKS Resources Bhd has plans to dispose of its newly-opened Evolve Concept Mall located near Ara Damansara, Selangor in a bid to improve its cash flow. The company expects to complete the Sale and Purchase Agreement (SPA) within 12 months.

The community cum lifestyle shopping mall is located next to the proposed Light Rail Transit (LRT) station and has a lettable area of 460,000 sq. ft. Evolve Concept Mall’s fair value stood at RM390.0 mln, with 80.0% of its tenants are committed to opening their store by end-2016. (The Edge Daily)

Sapura Kencana Petroleum Bhd (SKPetro) reported a fall in its 1QFY17 net profit of 57.7% Y.o.Y to RM110.3 mln, from RM260.7 mln in the previous corresponding year, due to weaker performance across all business segments as demand for its oil rigs fell amid the weaker crude oil prices. Its Energy sector suffered the worst slowdown, dragged by lower average realised price and lower crude oil output. Quarterly revenue dropped 14.0% Y.o.Y to RM1.94 bln, compared to RM2.26 bln from 1QFY16.

Separately, the group secured six new projects, which totalled US$125.0 mln (RM513.0 mln). BP Trinidad & Tobago LLC has also extended its contract with SapuraKencana Drilling Jaya Ltd (SKD Jaya) for the use of the its semi-submersible tender assist drilling rig. The extension covers an additional well for around 45 days, on top of additional work on the current well for about 60 days. (The Star Online)

UEM Edgenta Bhd has been awarded a RM43.0 mln contract from Malaysia Airlines Bhd to provide facilities management, hotel management, cafeteria and mailing services to the latter. The group’s 80.0%-owned subsidiary, KFM Holdings Sdn Bhd has entered into a related party transaction with Malaysia Airlines for the above contract.

A sinking fund amount of RM4.1 mln will be collected from Malaysia Airlines and will be used for facilities maintenance based on certain terms and conditions set by Malaysia Airlines. The stipulated contract period is 34 months. (The Star Online)

Subur Tiasa Holdings Bhd reported a 3QFY16 net loss of RM13.9 mln, from a net profit of RM2.7 mln in a year ago, due to lower average free on board (FOB) export selling price of logs, plywood and sawn timber, increased raw material costs for manufacturing of timber products and higher volume of fertilizer applied to higher acreage of mature oil palm trees. Meanwhile, quarterly revenue fell 37.6% Y.o.Y to RM110.2 mln, from RM176.7 mln.

Moving forward, Subur Tiasa will focus on improving its existing business while diversifying into other businesses in order to deliver sustainable profitability and continual growth of the organization. (The Edge Daily)

Comintel Corp Bhd's registered a 188.2% Y.o.Y jump in its 1QFY17 net profit to RM5.4 mln, from RM1.9 mln in the previous corresponding period, while revenue rose 24.5% Y.o.Y to RM103.7 mln from RM83.3 mln.

The improved earnings was mainly attributed this stronger performance of its manufacturing segment, on the back of productivity improvement, higher demand for its products and shipment of better margin products. (The Edge Daily)

YTL Power International Bhd is unable to quantify the effects of the Brexit referendum results on the group’s business at this juncture. However, it does not expect its water services unit in the U.K. to be materially affected.

The group’s major operation in the U.K. includes its 100.0% stake in Wessex Water, which provides water and sewerage services in the southwest region of England under a regulatory concession granted by the government.

YTL Power added it is diligently monitoring events and conducting ongoing assessments of any operational and financial impacts and will make further announcements in due course. (The Star Online)

Wah Seong Corp Bhd has announced that the audit and investigations led by the Royal Malaysian Customs Department on its indirect wholly-owned unit, PPI Industries Sdn Bhd, has been concluded with no penalties imposed.

PPI's bank accounts and assets, which were temporarily frozen to facilitate the investigation, have been unconditionally released in accordance to a revocation order dated 10th June 2016 and 13th June 2016 from the Customs. PPI's will resume it business operations as usual moving forward. (The Edge Daily)

Source: M+ Online Research - 29 June 2016