The FBMKLCI (-0.4%) closed in the negative territory last Friday after trading in the red for most of the session, in-line with the falling Ringgit and crude palm oil prices. The key index also snapped its two-straight weeks of gains to close lower by 0.1% W.o.W. The FBM ACE advanced 0.1%, while the FBM Small Cap fell 0.1% and the FBM Fledging closed unchanged. The broader market, meanwhile, finished mostly lower.

Market breadth was negative as losers outstripped gainers on a ratio of 387-to- 305 stocks, while traded volumes rising 93.3% from a day earlier to 1.23 bln shares as trading activities resumed after the Hari Raya holiday.

Among the biggest key index decliners was Petronas Gas and Petronas Dagangan, which fell 46.0 sen and 10.0 sen respectively, on the back of quick profit-taking activities. Meanwhile, PPB Group (-28.0 sen), Sime Darby (-13.0 sen) and Genting Malaysia (-10.0 sen) retreated as crude palm oil price fell to its lowest level since 0ctober last year. The broader market laggards include Warisan (-19.0 sen), followed by MSM Malaysia Holdings (-18.0 sen), UEM Edgenta (-17.0 sen), UMW Holdings (-17.0 sen) and Prestariang Bhd (-15.0 sen).

In contrast, the main advancers on the broader market were Dutch Lady (+RM2.8), Carlsberg (+48.0 sen) and United Plantations (+38.0 sen), while Lay Hong and Huat Lai Resources gained 16.0 sen and 14.0 sen respectively. Heineken Malaysia also added 12.0 sen after a brokerage raised its target price. Notable key index gainers were Hong Leong Financial Group (+42.0 sen), BAT (+24.0 sen), KLCC (+9.0 sen), Tenaga Nasional (+6.0 sen) and Maxis (+5.0 sen).

Asian benchmark indices closed lower last Friday. The Nikkei fell 1.1% as the strengthening Yen continued to pressure Japanese exporters ahead of the U.S. jobs data. Meanwhile, the Hang Seng index and the Shanghai Composite finished in the red, losing 0.7% and 1.0% respectively as the outstanding non-performing loans (NPLs) in Chinese banks rose 0.2% to 2.2% of the total bank lending in May, mainly due to the anemic economic environment, industrial overcapacity and slowing investment. ASEAN stockmarkets, meanwhile, closed mostly in the red.

Wall Street recovered last Friday, after better-than-expected U.S. payroll data showed a surge in hiring, relieving worries about the growth of the world’s largest economy after Britain’s decision to leave the European Union. The Dow expanded 1.4%, while the S&P500 (+1.5%) and the Nasdaq (+1.6%) advanced. U.S. total nonfarm payroll employment rose by 287,000 in June, above market consensus of 175,000 jobs.

European stockmarkets rallied on the back of strong U.S. jobs data and expectations of additional stimulus by the European Central Bank to boost the market. The FTSE rose 0.9% as financials and consumer discretionary stocks gained momentum. Meanwhile, the DAX and CAC jumped 2.2% and 1.8% respectively.

THE DAY AHEAD

After the fresh selling last Friday, we think that stocks on Bursa Malaysia could post a quick recovery to start the week as more market participants return to the market after the Hari Raya break to bargain hunt on some of the beaten down stocks. The positive performance of overseas stockmarkets will also provide some impetus for local stocks to post a modest recovery over the near term.

On the upside, we think the key index will re-test the 1,650 level and if it is cleared, the 1,660 level will be the next target. The 1,630 level, meanwhile, will continue to serve as the main near term support.

We also think that the lower liners and broader market shares could see renewed interest as retail investors take advantage of the more positive near term sentiments to undertake trading activities.

COMPANY BRIEFS

Scomi Engineering Bhd's subsidiary, Scomi Rail Bhd has been served with a winding-up petition over a RM1.0 mln claim by PSI Incontrol Sdn Bhd. The dispute arose in connection with an agreement entered between Scomi Rail and PSI on 26th September 2012 which has now been terminated by Scomi Rail.

Scomi Rail will take steps to apply to strike-off the petition because the debt is disputed for reasons, amongst others, due to PSI's failure to rectify its poor performance of its obligations under the contract. (The Star Online)

Lion Diversified Holdings Bhd and its wholly-owned unit, Limbungan Makmur Sdn Bhd have been served a claim for damages for allegedly breaching a Contract of Affreightment (CoA) by Monaco-based Classic Maritime Inc. Classic Maritime is seeking damages — in the sum of US$20.5 mln and other such sums that are owed to it from Limbungan Makmur. (The Edge Daily)

ML Global Bhd has announced that its wholly-owned subsidiary, Vintage Tiles Industries Sdn Bhd (VTI), will cease its roof tile manufacturing and trading business from 15th July 2016 to focus on the construction business. VTI will also be disposing of all its manufacturing machinery and equipment under its manufacturing division at a later stage.

The decision was made because VTI's business operates in a very competitive environment and in an industry that is experiencing declining revenue and margins. As at 31st December 2015, VTI's manufacturing division has incurred an accumulated loss of RM17.2 mln, while its unaudited quarterly results ended 31st March 2016 showed a loss of RM208,000. (The Edge Daily)

Multi-Usage Holdings Bhd's wholly-owned unit, Multi-Usage Property Sdn Bhd (MUPSB) is being sued for allegedly failing to fulfil its obligation under a sale and purchase agreement relating to the purchase of a plot of freehold land for RM8.5 mln in Seberang Perai, Penang. The legal claim stemmed from a dispute regarding the size of the land.

The plaintiff, Team Four Sdn Bhd (TFSB) is seeking to compel MUPSB to pay the purchase consideration to TFSB's solicitors within 14 days from the date of judgment to allow the redemption of the plot from OSK Capital Sdn Bhd and to settle the balance of the purchase consideration to TFSB. (The Edge Daily)

Reliance Pacific Bhd’s Chief Executive Officer, Datin Irene Tan has significantly cut down her stake in the loss-making travel services provider and hotel operator to 6.1%, from a 46.2% stake held in April 2016. Reliance Holdings Sdn Bhd, the investment vehicle of Tan and her husband, Reliance founder Datuk Gan Eng Kwong, has ceased to be a substantial shareholder in the company after disposing of 97.8 mln shares or an 11.4% stake in the company on 5th July 2016.

With the disposal of their stake held through Reliance Holdings and an additional 15.8 mln shares, Irene and Gan are both left with 52.0 mln shares, or a 6.1% stake in Reliance.

The largest shareholder of the company is now Datuk Md Wira Dani Abdul Daim, the son of former finance minister Tun Daim Zainuddin, who now controls some 265.8 mln shares or a 31.0% stake in the company. Executive Director, See Ah Sing, who is said to be a person linked to Daim, controls 210.8 mln shares or a 24.6% stake in the company after acquiring 113.6 mln shares on 5th July 2016. (The Edge Daily)

Source: M+ Online Research - 11 Jul 2016