Despite opening sharply lower at the start of the trading bell, the FBM KLCI managed to pare off most of its intraday losses before closing just 0.02% lower yesterday – snapping a streak of three consecutive winning days. The lower liners, however, ended mostly higher as the FBM Small Cap and FBM Fledgling rose 0.9% and 0.3% respectively, but the FBM Ace fell 0.8%. The broader market, meanwhile, closed mixed.

Market breadth stayed positive as losers pipped losers on a ratio of 411-to-354 stocks. Traded volumes, however, fell 9.7% to 1.56 bln shares on signs of profit taking activities.

BAT (-20.0 sen), Tenaga (-12.0 sen), Hong Leong Financial Group (-12.0 sen), Petronas Gas (-8.0 sen) and IOI Corporation (-6.0 sen) topped to big board’s decliners list. Notable losers on the broader market were Dutch Lady (- RM1.46), Aeon Credit (-18.0 sen), Lafarge (-13.0 sen) and Batu Kawan (-12.0 sen). Press Metal slipped 13.0 sen, marking its fourth consecutive session of decline.

Significant gainers on the broader market were Nestle (+RM1.08), Globetronics (+26.0 sen), MSM (+18.0 sen), Lay Hong (+17.0 sen) and George Kent (+16.0 sen). Kawan Food gained 7.0 sen after retesting its 10-year high level. Amongst the biggest gainers on the FBM KLCI were Genting Malaysia (+8.0 sen), CIMB (+7.0 sen), Hong Leong Bank (+6.0 sen), KLK (+6.0 sen) and PPB Group (+4.0 sen).

Asia benchmark indices ended mostly lower yesterday as the Nikkei fell 0.4%, but managed to trim most of its intraday losses on a stronger Japanese Yen. The Hang Seng Index (-0.2%) retreated from its YTD high, while the Shanghai Composite gained 0.04% after China’s State Council pledged to increase efforts to implement a proactive fiscal policy to boost economic growth. ASEAN stockmarkets, meanwhile, ended mixed.

US stockmarkets ended mostly lower overnight as the Dow (-0.1%) halted a streak of three straight days of gains. The S&P500 (-0.01%) pared most of its intraday losses on gains in energy stocks, but the Nasdaq gained 0.2% after Apple Inc. (+0.6%) unveiled the iPhone7 product in San Francisco.

Earlier, European benchmark indices - the FTSE (+0.3%), CAC (+0.6%) and DAX (+0.6%), all rose as the latter climbed into the positive territory YTD. Gains were boosted by speculation of an expansion in Quantitative Easing ahead of the ECB meeting. Amongst the biggest gainers were automotive-related stocks like Daimler AG (+1.2%), Volkswagen AG (+1.5%) and Michelin & Cie (+2.4%).

THE DAY AHEAD

Although the FBM KLCI has done well to recoup most of its intraday losses, its near term direction has turned indifferent as the buying momentum appears to be waning as the market nears the 1,700 resistance level. This means that the market is also caught at around the 1,690 level and the key index is likely to remain rangebound around the above level over the near term.

As it is, the insipid market breadth is leaving few options for the market to head higher and the cautiousness is likely to prevail for longer, thus dampening hopes for a significant market upside. The toppish market conditions will also temper the uptrend prospects, in our view.

A similar trend is expected to prevail among the lower liners and broader market shares as retail investors are also trending cautiously.

COMPANY BRIEF

The trading of Century Logistics Holdings Bhd shares on Bursa Malaysia will be suspended from 9.00 am to 12:30 pm on 8th September 2016, pending a material announcement. The counter closed on 7th September 2016 at RM1.04, a gain of 12.5 sen with 26.0 mln shares changing hands. (The Star Online)

Bioalpha Holdings Bhd has proposed to raise RM28.0 mln from a renounceable rights issue, the bulk of which will be used to finance the launch of new products and expand its herbal park. The rights issue would on the basis of one rights share-for-every five existing shares. The sweteener is one free warrant for every rights share subscribed.

The exercise entails the issuance of 133.3 mln rights shares together with 133.3 mln warrants, based on the enlarged issued and paid up share capital of Bioalpha. The issue price of the rights shares and the exercise price of the warrants shall be determined and announced later.

Of the RM28.0 mln raised, it will use RM13.5 mln to launch new products, RM3.5 mln to buy new machinery to boost its production capability, RM10.0 mln for Phase 2 of its herbal park in Pasir Raja, Terengganu comprising 880-ac. of land and the remaining RM1.0 mln will be used for working capital. (The Star Online)

Timber product manufacturer NWP Holdings Bhd has inked a Heads of Agreement for a turnkey construction contract to undertake six affordable housing projects schemes under Syarikat Perumahan Negara Bhd (SPNB) and Perbadanan PR1MA Malaysia with an estimated gross development value (GDV) of RM745.0 mln.

M2B World agrees to award the construction of the projects to NWP, subject to the parties entering into a definitive agreement within three months or any further extended period as the parties may mutually agree.

NWP plans to finance the projects through various equity fund raising exercises and/or debt financing. Last month it proposed to increase its authorised capital to RM500.0 mln from RM100.0 mln as well as to issue shares representing of up to 15% of its paid-up capital to expand its working capital. (The Star Online)

Wah Seong Corporation Bhd bagged an estimated €600.0 mln (RM2.73 bln) contract involving pipe coating services for the Nord Stream 2 gas pipeline, which is about 1,200 km long. Nord Stream 2 is a proposed gas pipeline via the Baltic Sea.(The Edge Daily)

Telekom Malaysia Bhd's (TM) wholly-owned unit, Mobikom Sdn Bhd has subscribed to RM495.0 mln (nominal value) of the second tranche of webe's Convertible Medium Term Note (CMTN). The proceeds of this CMTN subscription will be utilised to fund the implementation of webe's business plan.

As a result of Mobikom's subscription to the CMTN, TM's shareholding in webe on a fully diluted basis is 82.0%, while Green Packet Bhd and SK Telecom Co Ltd owns 13.2% and 4.8% respectively, under the terms of the Investment Agreement.

However, TM's shareholding in the ordinary equity of webe remains at 72.9%, subject to further conversion of the CMTNs and/or exchange and conversion of the exchangeable medium term note (EMTN) into webe's shares. (The Edge Daily)

Sunsuria Bhd and its wholly-owned unit Sunsuria North Sdn Bhd (SNSB) plan to sell two shares of RM1.00 each in Concord Property Management Sdn Bhd, representing 100% of the latter's entire issued and paid-up share capital for RM38.1 mln.

Sunsuria has entered into an unconditional share purchase agreement (SPA) with Singapore-based Creed Investments Pte Ltd and Sunsuria Executive Chairman Datuk Ter Leong Yap following its exercise of put option. (The Edge Daily)

Berjaya Food Bhd’s 1QFY17 net profit decreased 18.1% Y.o.Y to RM5.0 mln as the weaker Ringgit caused its Starbucks coffee chain's profit margin to shrink. Revenue for the quarter, however, gained 6.8% Y.o.Y to RM141.4 mln. (The Edge Daily)

Property developer Land & General Bhd (L&G) is not putting any of its launches on the back burner as it anticipates the market to gradually recover starting 2017. The group will be launching projects worth RM1.60 bln in FY17 and this will be its main earnings growth driver.

The projects include Phase 1 of Sena Parc in Senawang, Negeri Sembilan (RM260.0 mln), Phase 3 and 4 of Damansara Foresta in Bandar Sri Damansara (RM480.0 mln) and Astoria along Jalan Ampang (RM860.0 mln). L&G has unbilled sales of RM80.0 mln, which could support its earnings in FY17. (The Edge Daily)

Source: M+ Online Research - 8 Sep 2016