The FBM KLCI rose 0.5% for the second straight day, on the back of a firmer Ringgit and buying support from selected heavyweights. The lower liners closed up, led by FBM Fledging (+0.5%) amid a mostly positive broader market.

Market breadth remained negative as decliners outpaced the gainers on a ratio of 407-to-378 stocks. Traded volumes however, gained 13.7% to 1.64 bln shares, following the allocation of up to RM3.0 bln for GLCs to invest in small and mid-cap companies in Budget 2017.

Key index advancers included BAT (+44.0 sen), Petronas Gas (+36.0 sen), Maxis (+20.0 sen), Genting Malaysia (+14.0 sen), and RHB Bank (+13.0 sen). Meanwhile, consumer products counters like Dutch Lady Milk Industries (+38.0 sen) and Ajinomoto (+26.0 sen) led the broader market winners, trailed by Heineken Malaysia (+26.0 sen), Maxis (+20.0 sen) and KPJ Healthcare (+18.0 sen).

On the other hand, Carlsberg (-24.0 sen) Scientex (-21.0 sen), Kossan Rubber Industries (-17.0 sen) and DKSH Holdings (-16.0 sen) lost ground, while Bursa Malaysia fell 23.0 sen after its 3Q2016 net profit declined 14.4% Y.o.Y to RM44.0 mln. Losers on the blue-chips gauge were Telekom Malaysia (-13.0 sen), Hap Seng Consolidated (-9.0 sen), Kuala Lumpur Kepong (-8.0 sen), Petronas Dagangan (- 8.0 sen) and KLCC Prop & REITs (-4.0 sen).

Key regional benchmark indices finished mostly higher, after reversing earlier losses, as investors look forward to a slew of global economic data due this week. The Nikkei gained 0.3% after Japan’s latest trade data beat analyst’s expectations, while the Hang Seng Index climbed 1.0% to close at 23,604.1 points.

Similarly, the Shanghai Composite Index (+1.2%) also closed on a stronger footing, on the back of increased risk appetite for equities following the Chinese government’s crackdown on real-estate speculation. ASEAN equities were mostly up on Monday’s close.

Wall Street ended in the positive zone, amid a plethora of merger and acquisition activities. The Dow ended up 0.4%, led by blue-chips like Microsoft (+2.3%) and Boeing (1.3%). The Nasdaq (+1.0%) finished near its intraday high, while the S&P500 increased 0.5% as eight out-ofeleven main sectors closed in green.

The majority of the European equities finished higher on Monday, attributed to better-than-expected Eurozone data. The FTSE however, fell 0.5%, following a downgrade call from a major investment bank and weaker crude oil price. Meanwhile, Germany’s DAX notched a 0.5% gain to close at a record high and the CAC advanced 0.4%, backed by gains in banking counters.

THE DAY AHEAD

As interest in the broader market and lower liner stocks ebbed, there was continued support on selected index heavyweights by local and foreign institutional funds to help the FBM KLCI to breach the 1,670 level yesterday amid the announcements of several stockmarket boosting measures in Budget 2017.

We think the positivity will remain over the near term, despite the continuing lull among the broader market and lower liners, as institutional investors would still continue to bargain hunt on selected index heavyweights. The breakout of the 1,670 also points to further near-term positivity after a major hurdle has been crossed. Meanwhile, the improved overseas stockmarket performance will also aid the FBM KLCI’s near term ascend, in our view

On the upside, the next resistance of 1,680 level could now come into play, followed by the 1,690 level. The 1,670 level has now become the near term support, followed by the 1,660 level.

While we think the index heavyweights could see ample support, the broader market and lower liners may still see scant following due to the sustained wariness among many retail investors.

COMPANY BRIEFS

Ta Ann Holdings Bhd will boost its plantation land by 5,280 ha. through the proposed acquisition of the entire equity interest in Agrogreen Ventures Sdn Bhd for RM211.1 mln. Agrogreen’s main assets are its mineral soil landbank, of which more than 5,090 ha. have been planted with oil palms age one-to-five years old. Based on the planted acreage reported in its latest annual report, this would increase its planted area by over 6.0% to 87,372 ha. The proposed purchase is expected to be completed in 1H2016. (The Star Online)

Huat Lai Resources Bhd’s Chairman and Managing Director, Lim Yeow Her and his brothers have launched a voluntary takeover offer of the poultry firm’s shares for RM5.00 each to take it private. The brothers, via Esprit Unity Sdn Bhd and its shareholders has offered to buy all the remaining shares that they did not own, representing 25.4% of Huat Laui’s paid-up share capital. The Lim brothers would have to fork out RM98.9 mln for the 19.8 mln ordinary shares they do not already own. (The Star Online)

Ekovest Bhd, which in April 2016 took full control of the project delivery partner of the RM4.40 bln River of Life (RoL) project in Kuala Lumpur, has been awarded its first new RoL jobs since the takeover, worth RM255.5 mln. Its unit, EkoRiver Construction Sdn Bhd (formerly Ekovest- MRCB Construction Sdn Bhd) had clinched two new packages along with the contract to build an interceptor system to improve and beautify the Klang and Gombak rivers.

In addition, it is to construct an interceptor system and related works to improve the river water quality, including the water treatment system along the Sungai Gombak and Sungai Klang. The works are expected to take two-and-a half years to complete. (The Star Online)

British American Tobacco (M) Bhd’s (BAT) 3Q2016 net profit slipped 17.0% Y.o.Y to RM212.6 mln, due to volume contraction in the total legal domestic market after the steep excise increase in November 2015. Revenue for the quarter dipped 19.6% Y.o.Y to RM932.9 mln.

For 9M2016, cumulative net profit fell 39.6% Y.o.Y to RM433.0 mln. Revenue for the period declined 17.0% Y.o.Y to RM2.92 bln. A third interim dividend of 55.0 sen per share was announced. (The Star Online)

Bright Packaging Industry Bhd’s (BPI) 4QFY17 net profit stood at RM1.7 mln vs. a net loss of RM1.5 mln in the previous corresponding quarter, owing to higher savings in material costs and favourable adjustments on deferred tax liability. Revenue for the quarter, however, slipped 7.6% Y.o.Y to RM14.4 mln.

For FY16, cumulative net profit jumped 131.8% Y.o.Y to RM1.8 mln. Revenue for the year added 39.5% Y.o.Y to RM62.4 mln. (The Edge Daily)

Bursa Malaysia Bhd's 3Q2016 net profit fell 14.4% Y.o.Y to RM44.0 mln, as contribution from securities market weakened. Revenue for the quarter decreased 7.3% Y.o.Y to RM119.4 mln.

For 9M2016, cumulative net profit contracted 3.1% Y.o.Y to RM143.5 mln. Revenue for the period, however, was flattish at RM383.0 mln. (The Edge Daily)

Source:M+ Online Research - 25 Oct 2016