The FBM KLCI ended flat yesterday as the key index succumbed to a final hour selling pressure which erased all its intraday gains. The lower liners – the FBM Small Cap, FBM Fledgling and FBM Ace all added 0.1% each, while the Consumer Products (+0.2%) and Industrial Products (+0.3%) sub-indices outperformed the mostly negative broader market.

Market breath remained negative as decliners outstripped advancers on a ratio of 460-to-324 stocks. Traded volumes shrunk 4.6% to 1.29 bln shares amid the lack of fresh catalysts.

Leading the key index decliners list was Sime Darby (-13.0 sen), followed by KLK (-12.0 sen), Public Bank (-10.0 sen), CIMB (-6.0 sen) and Maxis (-5.0 sen). Notable decliners on broader market were consumer products stocks like Panasonic Malaysia (-96.0 sen), Nestle (-30.0 sen) and Carlsberg (-24.0 sen), while United Plantations and Amway shed 18.0 sen and 16.0 sen respectively.

Meanwhile, significant gainers on the broader market were Fraser & Neave (+26.0 sen), Paragon Union (+17.5 sen), Southern Acids (+13.0 sen), Jaycorp (+12.0 sen) and Thong Guan Industries (+12.0 sen). Tien Wah added 14.0 sen to record its third consecutive winning streak. Anchoring the gainers on the FBM KLCI were BAT (+38.0 sen), Axiata (+16.0 sen), Maybank (+7.0 sen), Petronas Chemicals (+7.0 sen) and Hong Leong Bank (+4.0 sen).

Chinese equities resume trading after a one week break as the Shanghai Composite jumped 1.5%, underpinned by gains in energy stocks. Both the Hang Seng Index and Nikkei were closed for Chung Yeung Festival and Health-Sports Day public holiday respectively. ASEAN stockmarkets, meanwhile, ended mostly lower.

Wall Street edged higher overnight as the Dow gained 0.5% after the second Presidential debate saw Hilary Clinton’s lead widened. The S&P 500 also added 0.5%, led by the energy sector (+1.5%) after Russia has unexpectedly joined OPEC to limit crude oil production, while the Nasdaq ended 0.7% higher.

Earlier, key European benchmark indices - the FTSE (+0.8%), CAC (+1.1%) and DAX (+1.3%), all recovered from their intraday low, boosted by the rally in crude oil prices. Notable gainers include oil & gas companies like Statoil ASA (+2.7%) and Repsol SA (+3.0%).

THE DAY AHEAD

Although most key global stock indices gained ground yesterday, their ascend was largely measured with market wariness still prevalent to cap the gains. Nevertheless, the crude oil price gain has given some near term price impetus to oil and gas stocks and we expect similar stocks on Bursa Malaysia to also react positively to the higher oil prices.

Consequently, we also expect the FBM KLCI to react positively over the near term, in tandem with the performance of overseas stockmarkets. This could mean that the key index could retest the 1,670 level as we expect the selective buying to lead the market higher. The 1,660 level is the intermediate support, while the 1,650 is the main resistance.

Among the lower liners, however, we see the mixed-to-lower market conditions persisting due to the lack of sustainable leads. With the selective buying on the index heavyweights, coupled with the continuing tepid interest on the lower liners and broader market shares, we see market breadth and depth staying on the thin side for the time being.

COMPANY BRIEFS

Malaysia Airports Holdings Bhd (MAHB) reported a 12.3% Y.o.Y jump in its passenger traffic to 7.5 mln at its 39 airports in September – its first double-digit growth this year, boosted mainly by ten airports that saw growth of between 11.0% Y.o.Y and 26.0% Y.o.Y.

Its international segment registered a 15.3% Y.o.Y increase to 3.6 mln passengers, from 3.1 mln passengers while, domestic passengers rose 9.8% Y.o.Y to 3.9 mln from 3.6 mln previously. (The Star Online)

Kobay Technology Bhd has appointed Koay Wooi Tatt as its Chief Operating Officer (CEO). Wooi Tatt is the son of Koay Ah Bah @ Koay Cheng Hock, Kobay’s Non-Independent Non-Executive Director.

Ah Bah, Datuk Koay Hean Eng and Koay Cheng Lye are brothers and major shareholders of Kobay Technology via their 25.8% shareholdings in Kobay Holdings Sdn Bhd. (The Edge Daily)

Astro Malaysia Holdings Bhd remains confident that its content cost will be between 32.0% and 35.0% of its annual revenue in FY18.

The group’s cost on content for FY17 rose to about 38.0% of total revenue, following the weakening Ringgit and two major sports events - mainly the Rio 2016 Olympics and the UEFA Euro 2016. (The Edge Daily)

Tropicana Corp Bhd is revising its disposal price of the Sky Express Hotel in Bukit Bintang, Kuala Lumpur, to RM58.0 mln from RM55.0 mln.

The group has entered into a fourth supplemental agreement on 7th October 2016 to revise the sales consideration and to grant a further extension of 60 days from the aforementioned date for the purchaser, Pinnacle Supreme Sdn Bhd, to settle the revised remaining balance of the sales consideration, as well as late interest payment. (The Edge Daily)

APM Automotive Holdings Bhd has proposed to establish an Islamic Commercial Papers (ICP) programme and Islamic Medium-Term Notes (IMTN), each with nominal value of up to RM1.5 bln. Both programmes will have a tenure of seven years and twenty years respectively, from the date of first issue.

The funds from the issuance of the sukuk Murabahah will be used for general corporate purposes and to meet future financing needs of APM and its subsidiaries. (The Star Online)

Perisai Petroleum Teknologi Bhd‘s Managing Director (MD), Datuk Zainol Izzet Mohamed Ishak has sold off 36.5 mln shares (2.9%) equity stake in the company as part of a financing arrangement. The shares, worth up to RM3.1 mln, were disposed in the open market. (The Star Online)

Source:M+ Online Research - 11 Oct 2016