Although the FBM KLCI (+0.1%) managed to inch higher on last Friday, owing to the bargain hunting on selective banking heavyweights, the key index extended its weekly losses by 0.7% W.o.W. The lower liners – the FBM Small Cap (+0.4%), FBM Fledgling (+0.5%) and the FBM ACE (+0.8%) all rebounded, while the Industrial sector (-0.2%) underperformed the positive broader market.

Market breadth turned positive as gainers outpaced gainers on a ratio of 469-to-327 stocks. Traded volumes, however, slipped 2.7% to 1.43 bln shares as investors opt to wait for further market leads amid the volatile market sentiment.

KLK (+14.0 sen) topped the big board gainers list, followed by Public Bank (+14.0 sen), KLCC (+8.0 sen), BAT (+6.0 sen) and Hong Leong Financial Group (+6.0 sen). Consumer Products and glove manufacturers stocks like Dutch Lady (+RM2.06), Fraser & Neave (+34.0 sen), Top Glove (+22.0 sen) and Kossan (+17.0 sen) were amongst the biggest gainers on the broader market. YEN Global (+14.0 sen), meanwhile, rose to fresh 10-year high.

On the flipside, notable decliners on the broader market include Carlsberg (-20.0 sen), TAHPS Group (-20.0 sen), Khind Holdings (-15.0 sen), Lafarge (-11.0 sen) and Negri Sembilan Oil Palms (-10.0 sen). Meanwhile, Petronas Gas (-12.0 sen), Westports (-8.0 sen), Astro (-5.0 sen), Tenaga (-4.0 sen) and AmBank (-4.0 sen) were amongst the biggest decliners on the key index.

The Nikkei (-0.01%) ended largely flat after recouping most of its intraday losses, but managed to close 3.5% W.o.W higher. The Shanghai Composite gained 0.1%, lifted by a recovery in commodity prices, coupled with potential stimulus measure announcements from the G20 meeting over the weekend. The Hang Seng Index added 0.5% to close at a record high YTD. ASEAN stockmarkets, meanwhile, ended mostly higher.

Wall Street closed higher on last Friday as the Dow gained 0.4% after the release of the soft jobs data could mean a delay to the next interest rate hike. On the broader market, the S&P added 0.4% with all ten main sectors advancing, while the Nasdaq closed 0.4% higher.

Earlier, key European benchmark indices - the FTSE (+2.2%), CAC (+2.3%) and DAX (+1.4%), all rallied after the weak US jobs data dampened the outlook of a potential rate hike in the upcoming FOMC meeting. Notable gainers were banking stocks such as Deutsche Bank (+1.3%), Societe Generale SA (+1.7%) and BBVA SA (+1.6%).

THE DAY AHEAD

We think the recovery of key overseas stock indices at the end of last week could also extend to stocks on Bursa Malaysia amid the reduced possibility of a near term interest rate hike. This may entice some fresh bargain hunting on selective index linked stocks after their weakness last week.

At the same time, the FBM KLCI has seemingly found near term support at the 1,670 level and the continuing recovery may tip the key index on its way back to the 1,680 level.

We also think the positivity among the index heavyweights will also extend to the lower liners and broader market shares and we expect retail investors to also increase their trading activities. However, we think the upsides will be measured as many retail investors will adopt quick profit taking activities.

COMPANY BRIEF

VS Industry Bhd’s Hong Kong-listed associate company, VS International Group Ltd (VSIG) has issued a profit warning notice on 2nd September 2016 on its performance for FY16 (financial year ended 31st July 2016). The 43.7%-owned VSIG expects the company to post a substantial increase in its loss in FY16 compared with the preceding year, mainly due to a provision for impairment. The provision is related to the deposits paid for last year’s proposed acquisition of a 20.0% stake in a solar power plant in the Inner Mongolia.

The agreement had since lapsed following non-fulfillment of certain conditions and VSIG had been in discussion with the vendor for a refund on the deposits paid amounting to HK$42.5 mln (RM22.5 mln). Based on VS Industry’s effective stake of 43.7% in VSIG, the potential impairment to the VS group’s earnings is estimated at RM9.8 mln.

VSIG had, on 31st August 2016, entered into a settlement agreement with the vendor and other relevant parties for the refund of the deposits together with 5.0% interest per annum thereon by 30th November 2016. (The Star Online)

SCGM Bhd’s 1QFY17 net profit rose 12.8% Y.o.Y to RM5.5 mln on improved local and export sales. Revenue for the quarter increased 27.8% Y.o.Y to RM37.9 mln. (The Edge Daily)

Bintai Kinden Corp Bhd’s 70.0%-owned subsidiary in Singapore has bagged a job to supply and install air-conditioning and mechanical ventilation systems at a community hospital. The RM168.7 mln sub-contract was awarded to Bintai Kindenko Pte Ltd by Penta Ocean Construction Co Ltd.

The system would be installed at the proposed 19-storey community hospital at the Singapore General Hospital. (The Edge Daily)

WZ Satu Bhd has secured another construction job for the West Coast Expressway project, this time for part of the civil works package for the Changkat Cermin interchange to Beruas interchange worth RM110.3 mln.

The duration of the sub-contract is 30 months and the scope of work is in the mainline of the expressway, including imported granular materials, drainage works, pavement works, traffic signs, road markings and road furniture works, it said. (The Edge Daily)

A Singapore-based law firm, which is seeking to oppose Sona Petroleum Bhd’s winding up petition, served a supplemental affidavit on the special purpose acquisition company on 2nd September 2016.

This follows an earlier affidavit sent on 29th August 2016, affirmed by Law Asia Pte Ltd’s Managing Partner Paul Supramaniam. Law Asia is suing Sona for claims amounting to about US$47,300 as fees for alleged work done in relation to the potential acquisition of a qualifying asset by Sona. (The Edge Daily)

Kobay Technology Bhd has teamed up with Messrs Strata Homes Sdn Bhd to jointly develop a 43,124-sq. ft piece of land in Sungai Nibong, Penang into a condominium project, which will have a gross development value of RM60.4 mln.

Kobay estimates profit to be derived from the construction of the condominium project, to be RM3.0 mln. Kobay also intends to explore possibilities to acquire or enter into a joint venture for the additional parcel or part parcel of adjacent lands. (The Edge Daily)

Source: M+ Online Research - 5 Sep 2016