Tracking the positive developments in key regional stockmarkets, The FBM KLCI traded mostly higher yesterday before extending its gains by 0.2%. The lower liners continues to close mostly higher as the FBM Small Cap and FBM Fledgling indices climbed 0.2% and 0.8% respectively, while the Consumer Products (-0.02%) and Finance (-0.1%) sectors underperformed mostly positive broader market.

Market breadth turned positive as gainers outstripped losers on a ratio of 460-to- 329 stocks. Traded volumes rose 22.3% to 1.71 bln shares amid the more positive market sentiments.

Half of the key index constituents rose, led by PPB Group (+26.0 sen), followed by Genting Malaysia (+19.0 sen), Genting (+15.0 sen), Telekom (+12.0 sen) and Petronas Chemicals (+6.0 sen). Among the biggest gainers on the broader market were Lafarge (+20.0 sen), FGV (+16.0 sen), Heineken Malaysia (+14.0 sen), MSM (+13.0 sen), and Genting Plantations (+12.0 sen).

On the other side of the trade, consumer bellwethers like Dutch Lady (-70.0 sen), Panasonic (-40.0 sen), Ajinomoto (-20.0 sen) and Fraser & Neave (-20.0 sen) continues to succumb to profit taking activities. KESM Industries fell 40.0 sen after reporting a weak set of quarterly earnings. On the FBM KLCI, banking heavyweights like Hong Leong Financial Group (-12.0 sen), Public Bank (-6.0 sen) and Maybank (-4.0 sen) fell, while BAT and Petronas Dagangan slipped RM1.30 and 10.0 sen respectively.

Japanese stockmarkets rallied as the Nikkei jumped 1.9% after the Bank of Japan shifted its monetary policy framework to focus on bond yields, while leaving interest rates unchanged. The Shanghai Composite added 0.1%, while the Hang Seng Index closed 0.6% higher, buoyed by gains in energy stocks. ASEAN stockmarkets, meanwhile, ended mostly higher.

After the U.S. Federal Reserve kept its interest rates unchanged in the latest FOMC meeting, the Dow rose 0.9% overnight. On the broader market, the S&P 500 jumped 1.1%, anchored by gains in the energy sector (+2.1%) after crude oil prices rallied, while the Nasdaq (+1.0%) closed at a fresh all-time high.

Tracking the gains in Asian stockmarkets amid Bank of Japan’s new monetary stimulus direction, European benchmark indices - the FTSE (+0.1%), CAC (+0.5%) and DAX (+0.4%), all ended higher. Mining stocks like Anglo American (+3.6%), Rio Tinto (+2.2%) and Rangold Resources (+1.9%) rallied.

THE DAY AHEAD

The Federal Reserve’s decision to leave interest rates unchanged will continue to buoy the near term market sentiments as the sustained easy monetary environment could entice more short term inflows into equities, including emerging market stocks. At the same time, the positive overnight global market performance will also provide the catalyst for further near-term upsides on Bursa Malaysia.

Consequently, we expect the 1,660 resistance level to be cleared over the near term and the 1,670 level may also be tested as market participants capitalise on the near-term positivity to undertake short-term trading activities.

The increased participation will also lead to improve market breadth, which has been insipid over the past few weeks as investors retreated to the sidelines.

MACRO BRIEF

Malaysia's inflation rate in August rose 1.5% Y.o.Y, which was higher than economists' forecast of a 1.3% increase. The increases are due to gains in the index for meat (+6.9% Y.o.Y), fish and seafood (+5.2% Y.o.Y), fruits (+3.9% Y.o.Y) and vegetables (+3.1% Y.o.Y).

On a seasonally adjusted basis, the Consumer Price Index (CPI) for August increased 0.4% M.o.M. For the period from January to August 2016, the CPI climbed 2.3% Y.o.Y. (The Star Online)

COMPANY BRIEF

Alliance Financial Group Bhd (AFG) is planning a corporate re-organisation exercise which will see its banking arm, Alliance Bank Malaysia Bhd assume the group's listing status.

Existing AFG shareholders will exchange their shares for Alliance Bank's shares on a one-for-one basis, while their number of shares and percentage of shareholding will remain unchanged. (The Star Online)

The Employees Provident Fund (EPF) is buying a 40.0% stake in the concessionaire of the Duta-Ulu Klang Expressway (DUKE) for RM1.13 bln, from Ekovest Bhd. The latter had signed a binding term sheet with EPF to dispose of the stake in Konsortium Lebuhraya Utara-Timur (KL) Sdn Bhd (Kesturi).

The purchase consideration will be satisfied via RM921.0 mln in cash to Ekovest, with another RM60.0 mln to be paid upon the issuance of the certificate of practical completion for DUKE Phase 2.

Further, about RM149.0 mln cash will be paid by EPF, subject to Ekovest's fulfilment of the post-completion conditions, as stipulated in an agreement between both parties. (The Star Online)

Hai-O Enterprise Bhd registered a 46.9% Y.o.Y jump in its 1QFY17 net profit to RM9.7 million, from RM6.6 mln last year – due to stronger contributions from its multi-level marketing and wholesale divisions. Quarterly revenue was also up by 42.0% Y.o.Y to RM78.7 mln vs. RM55.4 mln in 1QFY16.

Moving forward, the group expects consumer spending to remain muted amid the ongoing economic slowdown. However, Hai-O is optimistic that it would continue to be profitable in the next quarter. (The Edge Daily)

Glomac Bhd's 1QFY17 net profit surged by 306.0% Y.o.Y to RM85.5 mln, from RM21.1 mln in the previous corresponding period, on the back of a gain from a land disposal. Revenue, meanwhile, doubled to RM251.4 mln from RM123.0 mln a year ago.

The group has earmarked over RM1.0 bln worth of launches in FY17, with the majority of the launches within the landed residential and affordable segments. (The Edge Daily)

Damansara Realty Bhd has terminated its joint-venture (JV) with Sumitomo Warehouse Co Ltd to take part in future business operations involving the handling and logistics of oil and gas downstream products in Pengerang Integrated Petroleum Complex.

The group had received a notice from Sumitomo to mutually abort the Memorandum of Understanding (MoU) signed between the two parties on 15th September 2015, as there was no significant progress since it was signed. (The Edge Daily)

Bintai Kinden Corp Bhd’s 69.8%-owned subsidiary, Bintai Kindenko Pte Ltd has secured a S$15.8 mln (RM48.2 mln) air conditioning and mechanical ventilation (ACMV) subcontract job for the proposed project involving five blocks of industrial factory, a workers dormitory and a parking facility at Tuas Avenue 1.

Contract works include the supply and installation of ACMV and engineered control smoke system works, as well as the testing, commissioning and maintenance of the ACMV and smoke system works. (The Edge Daily)

Malaysia Airports Holdings Bhd (MAHB) has received a notice from Express Rail Link Sdn Bhd (ERL) to indemnify the latter against a RM5.4 mln claim by Segi Astana Sdn Bhd on 21st September 2016.

MAHB is also required to indemnify ERL from further and continuing damages from 9th September 2016 until the date of vacant possession of some premises, or until such date as deemed appropriate by court for all losses and damages in relation to a civil suit. Neither details of the dispute, nor what the premises referred to was stated. (The Star Online)

Source: M+ Online Research - 22 Sep 2016