Tracking the weakness in Wall Street, coupled with the softer-than-expected industrial production data, the FBM KLCI ended 0.3% lower last Friday. The lower liners also ended mostly lower as the FBM Small Cap and FBM Ace fell 0.03% and 0.2% respectively, while the Construction (+0.1%) and Plantations (+0.1%) sectors outperformed the negative broader market.

Market breadth turned negative as losers outpaced gainers on a ratio of 401-to-324 stocks. Traded volumes declined 20.7% to 1.34 bln shares as profit taking activities emerged ahead of the holiday-shortened trading week.

Leading the FBM KLCI decliners list was BAT (-34.0 sen), followed by Genting (- 19.0 sen), KLK (-14.0 sen) and Public Bank (-8.0 sen). Tenaga fell 12.0 sen after Khazanah Nasional Bhd reportedly plans to divest a 1.5% stake in the utilities giant. Other notable decliners of the day include MPI (-18.0 sen), Hong Leong Industries (-17.0 sen), Heineken Malaysia (-16.0 sen), Carlsberg (-14.0 sen) and SAM Engineering (-12.0 sen).

Panasonic (+48.0 sen) topped the broader market gainers list, followed by SLP Resources (+12.0 sen), Aeon Credit (+10.0 sen) and IQ Group (+1.0 sen). Pecca added 4.0 sen after securing approval to extend its work scope into aviation leather upholstery. Meanwhile, Hong Leong Financial Group (+14.0 sen), Axiata (+3.0 sen), IOI Corporation (+2.0 sen), MISC (+1.0 sen) and YTL (+1.0 sen) were amongst the biggest advancers on the key index.

Asia benchmark indices – the Nikkei (- 1.7%), Shanghai Composite (-1.9%) and Hang Seng Index (-3.4%) all ended sharply lower yesterday. Market sentiment was spooked by the selloff in U.S. equities last Friday amidst fears over a potential interest rate hike in U.S. next week. ASEAN stockmarkets, meanwhile, ended mostly lower.

Wall Street staged a sharp recovery from the previous session selloff as the Dow rose 1.3% after the odds of an interest rates hike next week subsided. On the broader market, the S&P500 gained 1.5% with all ten main sectors advancing, while the Nasdaq closed 1.7% higher.

Earlier, European benchmark indices the FTSE (-1.1%), CAC (-1.2%) and DAX (-1.3%), however, all ended lower after the European Central Bank has held off additional stimulus measures. Notable decliners include mining giants such as Anglo American PLC (-3.2%), BHP Billiton PLC (-2.6%) and Glencore PLC (-2.2%).

THE DAY AHEAD

After Friday’s insipid market performance, we see further near term market weakness as speculation on the direction of interest rate will return to dominate sentiments. This is likely to see the market retaining its downside bias despite Wall Street’s sharp rebound overnight as market players are still wary of its near term direction.

In addition, the FBM KLCI’s inability to clear the 1,690 level is also leaving investors to ponder on the market’s next direction and is likely to send more investors, including retail investors, to the sidelines until calmer market conditions re-appears.

The continuing weakness may send the key index back to the 1,680 support level, while the 1,700 points level remains the key resistance level.

COMPANY BRIEF

Pesona Metro Holdings Bhd has secured a contract to build the Section 6 Kapar Interchange to Asam Jawa Interchange of the West Coast Expressway worth RM371.4 mln, via its joint-venture (JV) with Pembinaan Kaleigh Sdn Bhd.

The 30-month project, which was awarded to Pembinaan Kaleigh-Pesona Metro JV from Konsortium Kontraktor Melayu Sdn Bhd-Pembinaan Kaleigh JV is expected to commence on 12th September 2016. (The Star Online)

Bumi Armada Bhd has announced the resignation of its Chief Financial Officer, (CFO) Kenneth Murdoch with effect from 17th November 2016. Mr. Murdoch is stepping down to pursue his personal goals and will be replaced by Pierre Savy as Acting CFO. (The Star Online)

Star Media Group Bhd is selling its wholly-owned subsidiary Capital FM Sdn Bhd (CFSB), which operates Capital FM and Red FM radio stations, to Astro Malaysia Holdings Bhd's Measat Broadcast Network Systems Sdn Bhd for RM42.0 mln.

The group has entered into a conditional share sale and purchase agreement with Measat to dispose of five mln shares of RM1.00 each in CFSB.

Further, the disposal price is subject to adjustment after taking into consideration the quantum of the net working capital of CFSB as at the conditions fulfilment date. (The Edge Daily)

Paos Holdings Bhd is proposing a bonus issue of some 60.4 mln new shares on the basis of one bonus share-for-every two existing shares held, on top of 90.6 mln free warrants on the basis of one warrant-for-every two Paos shares after the bonus issue.

Paos has also proposed an increase in the authorised share capital of the group to RM200.0 mln, which include 400.0 mln shares, from RM100.0 mln comprising 200.0 mln shares. (The Edge Daily)

Taliworks Corp Bhd’s 49.0%-owned associate has bagged a RM73.1 mln contract to undertake the Ganchong water treatment project in Pekan, Pahang from the East Coast Economic Region Development Council.

The project works includes the completion of the main distribution pipeline, main buildings and associated works at Tg Agas.

The remaining 51.0% equity stake in the consortium is held by Ikatan Gemajaya Sdn Bhd. (Bernama)

Source: M+ Online Research - 13 Sep 2016