The FBM KLCI (-0.02%) finished flattish yesterday – due to profit-taking activities on heavyweights like Maxis (-3.2%) and BAT (-2.0%). The lower liners were mostly splashed in red with the exception of the FBM Ace, which rose 0.7%. Meanwhile, selling pressure in eight out-of-ten sectors pushed the broader market lower.

Market breadth was tepid as losers outweigh the winners on a ratio of 422- to-334 stocks. Traded volumes also lost ground, falling 13.0% to 1.43 bln shares on the back of fresh concerns over potential U.S. interest rate hike as U.S. economic growth steadies.

More than half of the key index constituents declined, dragged down by BAT (-RM1.00), followed by Maxis (-20.0 sen), Petronas Gas (-10.0 sen), PPB Group (-8.0 sen) and Telekom Malaysia (- 6.0 sen). Among the biggest losers on the broader market were Dutch Lady (-48.0 sen), Globetronics (-32.0 sen), United Plantations (-30.0 sen), Apollo (-19.0 sen) and Ajinomoto (-14.0 sen)

Notable gainers on the broader market, meanwhile, include Bintulu Port Holdings (+38.0 sen), UMS Holdings (+20.0 sen), LPI Capital (+16.0 sen), Teck Guan Perdana (+11.0 sen) and Cocoaland Holdings (+9.0 sen). On the FBM KLCI, banking heavyweights like Maybank (+17.0 sen), Hong Leong Financial Group (+6.0 sen), Ambank (+5.0 sen) and Hong Leong Bank (+2.0 sen) were among the biggest gainers. Sime Darby extended its gains for the sixth-straight session to close up by 3.0 sen.

Tracking the favorable sentiments from the U.S. and European stockmarkets overnight, Asian equities rallied to close higher on Tuesday. Despite coming down from an intraday high, the Nikkei rose 0.8% on the back of a weaker Yen, while the Shanghai Composite Index (+0.1%) clawed back earlier losses to close in the green. The Hang Seng Index, however, bucked the general positive trend by ending 0.2% lower. Meanwhile, the ASEAN equities closed mixed.

Disappointing corporate results pulled U.S. equities down yesterday, after lower-than-expected U.S. consumer confidence data raise doubts on the health of the U.S. economy. The Dow lost 0.3% to close near the 18,170.0 points – led by losses in the materials and consumer discretionary sectors. Meanwhile, the Nasdaq and the S&P500 ended down 0.5% and 0.4% respectively.

Key European stockmarkets retreated on Tuesday – dragged down by mixed corporate earnings in Europe and Wall Street as well as losses in Italian banks. The DAX (-0.04%) closed almost unchanged after hitting a fresh high for 2016, while the CAC gave up 0.3% to close in red. The FTSE, however, bucked the negative sentiment to close up 0.5%, boosted by gains in mining-related stocks.

THE DAY AHEAD

Once again, the market volatility is placing a brake on the FBM KLCI’s ascend after it showed promise following the breakout of the 1,670 level two days ago. As it is, the tentativeness is holding back further upsides as most market players are still wary over the sustainability of the current uptrend.

Nevertheless, it appears that the key index is attempting to consolidate its position above the 1,670 level, judging by its ability to recoup most of its intraday losses. Therefore, the mildly positive environment will remain if the FBM KLCI remains above the 1,670 level, which also serves as the intermediate support. On the upside, the 1,680-1,700 points level remains the main resistance zone.

Meanwhile, market depth remains thin, particularly among the lower liners and broader market stocks with the lack of interest likely to continue limiting the near term upsides, in our view.

COMPANY BRIEFS

Nestle (Malaysia) Bhd’s 3Q2016 net profit fell 10.2% Y.o.Y to RM160.7 mln, mainly due to the higher input cost and intense marketing and promotional activities. Revenue for the quarter, however, rose 4.5% Y.o.Y to RM1.26 bln.

For 9M2016, cumulative net profit added 16.1% Y.o.Y to RM570.2 mln. Revenue for the period increased 4.8% Y.o.Y to RM3.81 bln. (The Star Online)

Vizione Holdings Bhd’s 1QFY17 net profit stood at RM0.1 mln vs. a net loss of RM0.8 mln in the previous corresponding quarter, mainly due to discontinuation of loss-making electronic manufacturing services after it sold Singatronics (Malaysia) Sdn Bhd on 29th January 2016. Revenue for the quarter, however, declined 16.1% Y.o.Y to RM8.6 mln. (The Edge Daily)

Willowglen MSC Bhd has bagged two contracts worth RM10.8 mln from SP Power Assets Ltd, Singapore, through its wholly-owned subsidiary, Willowglen Services Pte Ltd. Both contracts are for the design, supply and installation of Radio Frequency Identification (RFID) System to Transmission Cable Tunnels.

The commencement date of the first contract valued at RM8.4 mln is on 24th October 2016 and will be completed by 8th July 2025. The other contract valued at RM2.4 mln will commence on October 2016, and be completed by 30th November 2024. (The Edge Daily)

Tanah Makmur Bhd's major shareholder, the Tengku Mahkota of Pahang Tengku Abdullah Sultan Ahmad Shah, has upped his takeover offer for the company to RM1.90 apiece, from RM1.80 earlier. The revised terms value Tanah Makmur at RM756.5 mln. Tengku Abdullah and the parties in concert with him collectively hold 271.1 mln shares, representing 68.1% stake in Tanah Makmur as at 24th October 2016.

The revised takeover offer represents a premium of 29.3% and 34.1% to Tanah Makmur's last closing share price and five-day volume weighted average market price, including 22nd April 2016, respectively. The latest offer price of RM1.90 per share is 1.8x over its price to book value and is higher than its net asset per share of RM1.07 as at 31st December 2015. (The Edge Daily)

Bank Negara Malaysia (BNM) has given the greenlight to Daiwa Securities Group Inc for its proposed acquisition of a minority stake in Affin Hwang Investment Bank Bhd (AHIB), the investment banking unit of Affin Holdings Bhd. The approval is subject to certain conditions, such as the finalisation of the shareholders agreement and related documentations to effect the proposal, in accordance with BNM’s approval.

The consideration and the size of the stake to be acquired by Daiwa Securities, however, was not revealed, but is expected to spend more than 10.0 bln Japanese Yen (about RM396.0 mln) for an interest of approximately 20.0% in AHIB. Talks began between Affin and Daiwa in May 2015, after Affin announced that Bank Negara expressed it had no objection in principle to the negotiations. (The Edge Daily)

IGB Real Estate Investment Trust's (IGB REIT) 3Q2016 net profit rose 5.6% Y.o.Y to RM68.8 mln, mainly due to higher rental income. Revenue for the quarter grew 4.1% Y.o.Y to RM125.9 mln.

For 9M2016, cumulative net profit added 3.3% Y.o.Y to RM207.5 mln. Revenue for the period gained 3.9% Y.o.Y to RM381.7 mln. (The Edge Daily)

MNC Wireless Bhd will convene a meeting to discuss the proposed removal of its directors following the receipt of a notice of intention to remove five of them from TA Nominees (Tempatan) Sdn Bhd and Lee Koh Yung, who were acting on the instruction of Metronic Global Bhd.

Metronic is MNC Wireless’ largest shareholder with a direct 18.8% stake as of 5th October 2016. In the interim, the company is also in the process of ascertaining whether the requisitionists hold not less than one-tenth of the issued and paid-up capital of the company. (The Edge Daily)

Globetronics Technology Bhd's 3Q2016 net profit dropped 55.0% Y.o.Y to RM9.2 mln, dragged down by lower sales coupled with a realised RM3.0 mln foreign exchange (forex) loss. Revenue for the quarter fell 40.9% Y.o.Y to RM52.5 mln.

For 9M2016, cumulative net profit slipped 65.2% Y.o.Y to RM19.4 mln. Revenue for the period declined 36.7% Y.o.Y to RM168.6 mln. (The Edge Daily)

Source: M+ Online Research - 26 Oct 2016