The FBM KLCI extended its losses for the fourth straight session last Friday, but the key index managed to recouped most of its intraday losses before closing just 0.01% lower. The lower liners – FBM Small Cap (+0.4%), FBM Fledgling (+0.2%) and FBM Ace (+0.7%) all staged a mild recovery, while the broader market ended mixed.

Market breadth turned positive as gainers edged losers on a ratio of 397-to-340 stocks. Traded volumes, however, fell 23.8% to 1.38 bln shares as more investors opted to remain on the sidelines, awaiting for further leads.

Leading the losers on the big board was PPB Group (-28.0 sen), followed by BAT (- 26.0 sen), Petronas Gas (-24.0 sen), Hong Leong Bank (-18.0 sen) and Public Bank (- 16.0 sen). Notable losers on the broader market include Malaysia Airport Holdings (-20.0 sen), Ajinomoto (-20.0 sen), Heineken (-12.0 sen), Lafarge Malaysia (- 12.0 sen) and Amtel Holdings (-10.0 sen).

On the other side of the trade, Cycle & Carriage Bintang (+28.0 sen) topped the broader market advancers list, followed by Hong Leong Industries (+27.0 sen), Dutch Lady (+20.0 sen) and Nestle (+20.0 sen). Gadang added 15.0 sen after reporting a strong set of quarterly earnings. Meanwhile, Genting (+21.0 sen), Petronas Dagangan (+8.0 sen), Tenaga (+6.0 sen), Sime Darby (+5.0 sen) and YTL (+5.0 sen) were amongst the biggest gainers on the key index.

Asian benchmark indices retreated as the Nikkei (-1.1%) gave up all its previous session’s gains after Bank of Japan dashed rumours of further stimulus measures. The Shanghai Composite extended its losses to close 0.9% lower to record its first weekly decline in a month after energy and consumer stocks retreated, while the Hang Seng Index declined 0.2%. ASEAN stockmarkets, meanwhile, ended mostly negative.

U.S. stockmarkets closed higher last Friday as the Dow added 0.3% to register its fourth straight week of gains. On the broader market, the S&P (+0.5%) closed at another record high, buoyed by stronger-than-expected corporate earnings from American Airlines (+4.0%) and Stanley Black & Decker (+4.8%), while Verizon gained 1.3% after reports of a deal to acquire Yahoo for approximately US$5.0 bln.

European stockmarkets also ended mostly higher as the FTSE and CAC climbed 0.5% and 0.1% respectively on stronger-than-expected Markit Composite PMI Flash data for July, which rose to 52.9. The DAX, however, fell 0.1%, dragged down by banking stocks like Commerzbank AG (-1.5%) and Deutsche Bank AG (-0.3%).

THE DAY AHEAD

Although overseas equities continue to head higher, we do not expect the positivity to permeate to the local stockmarket due to the ongoing 1MDB issues that would keep most investors on the sidelines and sentiments will stay on the cautious for longer.

Therefore, we also expect market breadth will remain on the thin side and this is will keep the FBM KLCI on a lackluster mode for longer. We expect the key index to drift within the 1,650 -1,670 levels over the near term as the market attempts to find a footing with domestic institutional players likely to provide the support.

The lower liners and broader market shares, meanwhile, will continue to see mixed trading environment as retail players will continue to adopt quick profit taking strategies.

COMPANY BRIEF

Heng Huat Resources Bhd has scrapped its proposal to transfer its listing to the Main Market due to the sluggish economic environment. However, Heng Huat expects to relook the proposed transfer in the future. (The Star Online)

Compugates Holdings Bhd has aborted its plans to log 96,000 ha. of forested area in the East Sepik Province of Papua New Guinea logging plans, due to the challenging market condition. The group has signed two Memorandum of Understanding (MoU) earlier this year. (The Edge Daily)

Pestech International Bhd is planning to establish an operation centre for East Malaysia and Brunei, following the acquisition of Forward Metal Works Sdn Bhd from Multiclassic Sdn Bhd for RM4.5 mln.

Forward owns a piece of leasehold land, measuring 5,260 sq.m. which houses a double-storey office cum warehouse. (The Edge Daily)

Wah Seong Corp Bhd has clinched another job from Norwegian’s Statoil ASA that is related to the Johan Sverdrup Export Pipeline project (JoSEPP), worth US$18.2 mln (RM73.9 mln).

The contract will see the shipping of pipes to a port at west coast of Norway and its subsequent offloading from 2Q2017 until 1Q2018. (The Star Online)

Bison Consolidated Bhd‘s 100%-owned subsidiary, Otaru Fine Food Sdn Bhd, has inked an agreement with Gemini Flour Mills (M) Sdn Bhd on 22th July 2016 for the acquisition of a piece of land in Rawang worth RM6.8 mln.

Further, the group has proposed to use the freehold vacant land for Bison’s food processing centre. The land acqusition is slated to be completed within one month from the date of the agreement. (The Edge Daily)

Bumi Armada Bhd is teaming up with Shapoorji Pallonji Oil and Gas Pte Ltd (SPOG) to combine the expertise of both companies to bid for works such as the design, fabrication and operations and maintenance of a floating production, storage and offloading (FPSO) vessel.

SPOG is a 100.0%-owned subsidiary of India conglomerate group Shapoorji Pallonji and Company Pte Ltd (SPCL), which is in turn wholly-owned by Shapoorji Pallonji Mistry, a Non-Independent Non-Executive Director on the board of Bumi Armada, and Cyrus Pallonji Mistry. (The Star Online)

Puncak Niaga Holdings Bhd has decided to exit the Chinese market, following the sale of its entire equity stake in water treatment company - Luwei (Pingdingshan) Water Co Ltd to Lushan County Chengnan Water Co Ltd. (The Edge Daily)

PUC Founder (MSC) Bhd has aborted its plans to subscribe for three million Redeemable Convertible Preference Shares (RCPS) in Green Forever Energy Sdn Bhd (GFE) valued at RM3.0 mln.

Both parties have agreed to terminate the term sheet, effective from 22th July 2016 mainly due to GFE’s failure to obtain the necessary approval from the Sustainable Energy Development Authority Malaysia for its Feed-in-Tariff (FiT) application in respect to the proposed 425 kilowatt (kW) photovoltaic power plant, which is to be constructed and operated by GFE. (The Edge Daily)

Ajiya Bhd‘s 2QFY16 net profit plunged 84.1% Y.o.Y to RM973,000 from RM6.1 mln a year earlier, dragged down by slow market conditions, mainly in the construction sector, which affected demand for its products. Revenue for the quarter also lost 9.4% Y.o.Y to RM101.2 mln, from RM111.7 mln in 2QFY15.

Meanwhile, its cumulative 1HFY16 net profit sank 62.2% Y.o.Y to RM4.1 mln, from RM10.8 mln in the previous corresponding year, while revenue contracted 10.0% Y.o.Y from RM216.5 mln in 1HFY15 to RM194.8 mln. (The Edge Daily)

Source: M+ Online Research - 25 Jul 2016