The FBM KLCI (-0.1%) retreated once again but managed to trim most of its intraday losses yesterday after trading in the negative zone for the entire trading session, in tandem with the weakness in key regional indices. The lower liners – the FBM Small Cap (+0.03%), FBM Fledgling (+0.1%) and FBM ACE (+0.9%), however, all advanced while the broader market ended mixed.

Market breath turned negative as decliners outnumbered advancers on a ratio of 398-to-355 stocks. Traded volumes added 2.4% to 1.60 bln shares.

Notable decliners on the FBM KLCI include BAT (-58.0 sen), Axiata (-11.0 sen), IHH (-7.0 sen), Genting (-7.0 sen) and Hap Seng (-5.0 sen). Meanwhile, Panasonic (-28.0 sen), Time DotCom (- 27.0 sen), Batu Kawan (-16.0 sen), Lafarge (-15.0 sen) and Heineken (-14.0 sen) were amongst the biggest losers on the broader market.

On the flipside, significant gainers on the broader market include Nestle (+78.0 sen), KESM Industries (+52.0 sen), Dutch Lady (+40.0 sen), Ajinomoto (+22.0 sen) and Hartalega (+15.0 sen). Anchoring the advancers on the big board were Petronas Gas (+18.0 sen), Genting Malaysia (+15.0 sen), Petronas Dagangan (+10.0 sen), PPB Group (+6.0 sen) and Sime Darby (+5.0 sen).

Asia benchmark indices closed in the red yesterday as the Nikkei tanked 1.1%, dragged down by banking stocks like Mitsubishi UFJ Financial Group and Mizuho Financial Group that fell 1.9% each. The Shanghai Composite (-0.2%) halted a streak of four consecutive sessions of gains, while the Hang Seng Index (-0.6%) extended its losses for the third straight day. ASEAN stockmarkets, meanwhile, ended mostly lower.

Wall Street staged a mild recovery overnight as the Dow gained 0.1% after the latest Federal Reserve minutes points to the possibility of an interest rate hike in near future. On the broader market, the S&P 500 added 0.1%, lifted by gains in the real estate, utilities and telecommunication sectors, but the Nasdaq inched 0.2% lower.

Earlier, European benchmark indices extended their losses – the FTSE (-0.7%), CAC (-0.4%) and DAX (-0.5%) all closed in the red. The negative market sentiments were mainly due to renewed weakness in crude oil prices, while renewed hard Brexit concerns sent the British Pound falling to its lowest level against the US Dollars.

THE DAY AHEAD

We continue to see little movement on the FBM KLCI over the near term as the general market environment is still on a cautionary mode as yet another hint on a potential U.S. interest rate hike later this year is likely to see reduced market interest from foreign sources. Domestically, there are still few noteworthy leads and market participants are awaiting for the upcoming Budget announcement for new catalyst.

Hence, we expect the FBM KLCI to remain rangebound and maintain its base building around the 1,660 and 1,670 levels over the near term with ample support from local institutions to sustain the key index within the above ranges.

The broader market and lower liners are expected to remain mixed as there is still no definitive market trend and we think that most retail players will remain cautious and stay on the sidelines. Expectedly, market breadth is likely to stay thin amid the lack of market interest.

MACRO BRIEF

Malaysia's industrial production index rose 4.9% Y.o.Y in August, driven by positive growth in all indices – manufacturing (+4.6% Y.o.Y), mining (+4.3% Y.o.Y) and electricity (+11.4% Y.o.Y). However, it was below economists’ expectations of a growth of 5.4% Y.o.Y.

Meanwhile, the industrial production index fell 0.9% M.o.M due to the decline in the mining sector, but this was mitigated by an increase in the electricity sector and manufacturing sector. (The Star Online)

COMPANY BRIEFS

MTD ACPI Engineering Bhd has confirmed that it has received several corporate proposals from various parties, although no arrangement has been made to date. The announcement was made in reply to a media report by The Edge weekly, which stated that it may become a reverse takeover vehicle for Putrajaya Perdana – a construction unit of Petro Saudi International. (The Edge Daily)

Perisai Petroleum Teknologi Bhd is now a Practice Note 17 (PN17) company after defaulting in the payment of principal and interest on a S$1250.0 mln bond.

Moving forward, the group will have to submit and implement a regularisation plan within the timeframe stipulated by the Securities Commission Malaysia (SC) or Bursa Securities. (The Star Online)

N2N Connect Bhd is planning to acquire 21.7 mln shares in AFE Solutions Ltd from Reuters International Holding S.A.R.L and Systex Capital Group Inc for US$20.6 mln cash (RM85.3 mln).

The AFE Group’s financial data and trading solutions business provides online stock market information, online securities trading systems, business solutions and associated sales. Its customers include, among others, stock brokerage firms, commercial banks, asset management firms and retail investors. (The Edge Daily)

Hibiscus Petroleum Bhd is acquiring Shell’s 50.0% equity interest in the 2011 North Sabah EOR Production Sharing Contract (PSC) for US$25.0 mln, excluding post completion adjustments and reimbursement to Shell.

The group has inked an agreement with Sabah Shell Petroleum Company Limited and Shell Sabah Selatan Sdn Bhd to acquire the 50.0% interest, while the remaining 50.0% of equity stake in the PSC is held by Petronas Carigali Sdn Bhd. The PSC includes the Labuan Crude Oil Terminal (LCOT) and the fields of St Joseph, South Furious, SF30 and Barton, all located offshore Sabah.

The PSC has production rights until 2040 and is estimated to produce up to 79.0 mln barrels of crude oil. The acquisition is slated to complete in 2017. (The Star Online)

Crest Builder Holdings Bhd has secured multi storey car park construction jobs for several low cost flats in Desa Petaling, Kuala Lumpur worth RM84.3 mln from Asianmax Corp Sdn Bhd. The project is expected to be completed within 12 months from the date of site possession. (The Edge Daily)

Zhulian Corp Bhd has registered a 63.7% Y.o.Y drop in 3QFY16 net profit to RM6.1 mln, from RM16.9 mln in the previous corresponding period - due to a drop in revenue and share of profit from an associate. Quarterly revenue was 13.1% Y.o.Y lower to RM44.0 mln, from RM50.7 mln in 3QFY15.

For 9MFY16, the group’s net profit plunge 47.8% Y.o.Y to RM21.1 mln vs RM40.5 mln a year ago, dragged down by an increase in foreign exchange losses, while revenue fell 13.5% Y.o.Y to RM139.4 mln, from RM161.2 mln last year. The group has also proposed a dividend of 1.5 sen, which is payable on 25th November, 2016. (The Edge Daily)

Scicom (MSC) Bhd has been awarded a10-year tax exemption following the approval of its Multimedia Super Corridor (MSC) status.

The government has also approved Scicom E Solutions' application for the pioneer status incentive under the Promotion of Investments Act 1986.

The income tax exemption is applicable to the statutory income derived from the MSC Malaysia Qualifying Activities for 10 years. (The Edge Daily)

Top Glove Corp Bhd 4QFY16 net profit declined by 36.1% Y.o.Y to RM65.6 mln against RM102.8 mln in 4QFY15, attributed to stiffer competition in 2HFY16 and volatile raw material prices and foreign exchange fluctuations. Revenue, meanwhile, inched up by 1.8% Y.o.Y to RM722.1 mln, from RM709.5 mln last year.

Top Glove’s full year net profit, however, stood at RM361.1 mln, representing a 29.0% Y.o.Y jump from RM279.8 mln previously – mainly due to higher revenue, which was 15.1% Y.o.Y higher at RM2.89 bln.

The group is also planning to declare a final dividend of 8.5 sen, bringing the total dividend for FY16 to 14.5 sen (The Star Online)

Source:M+ Online Research- 13 Oct 2016