The FBM KLCI (+0.1%) snapped three consecutive sessions of losses to finish on a positive note last Friday – mainly due to bargain hunting activities on selected heavyweights. Similarly, the key index also advanced for a third-straight week after registering marginal gains of 0.02% W.o.W. The lower liners – the FBM Small Cap (-0.1%), the FBM Fledging (- 0.1%) and the FBM Ace (-0.6%) indices, however, closed in the red amid a mostly negative broader market.

Market breadth, however, was negative as decliners outpaced winners on a ratio of 428-to-335 stocks. Traded volumes also fell slightly by 0.5% to 1.49 bln shares ahead of the Deepavali celebration.

On the key index, BAT (+48.0 sen), Tenaga (+10.0 sen), Public Bank (+8.0 sen) Maybank (+4.0 sen) and Sime Darby (+4.0 sen) were amongst the biggest winners. Meanwhile, Hong Leong Industries (+35.0 sen), Kwantas (+20.0 sen), Ajinomoto (+18.0 sen), Fraser & Neave (+18.0 sen) and Selangor Properties Bhd (+15.0 sen) topped the broader market advancers list.

In contrast, Panasonic Manufacturing Malaysia (-44.0 sen) Tasek (-22.0 sen), Dutch Lady (-20.0 sen) and Concrete Engineering Products (-13.0 sen) retreated. Meanwhile, Gadang lost 37.0 sen after reporting a 20.0% Y.o.Y drop in its 1QFY17 net profit at RM16.7 mln. Notable losers on the FBM KLCI were Kuala Lumpur Kepong (-28.0 sen), Genting Malaysia (-11.0 sen), Axiata (-4.0 sen), MISC Bhd (-4.0 sen) and Petronas Chemicals (-4.0 sen).

Key regional stockmarkets were mainly subdued last Friday, although Japanese equities outperformed the rest – led by gains in the financials stocks due to higher bond yields. The Nikkei rose 0.6% to close at 17,446.4 points, while selling pressure emanated through the Shanghai Composite Index (-0.3%) and Hang Seng Index (-0.8%) as slower growth in China weighed on market sentiment. Meanwhile, most ASEAN stockmarkets were splashed in red.

U.S. stockmarkets finished broadly lower, after the Federal Bureau of Investigation re-opened a probe into Hilary Clinton’s use of a personal email, while serving as the Secretary of State. The Dow fell marginally by 0.1% as losses in the healthcare segment offset energy gains. On the broader market, the S&P 500 and the Nasdaq fell 0.3% and 0.5% respectively.

On the other hand, European shares closed mostly higher last Friday, amid mixed economic data. The FTSE (+0.1%) extended its gains to the second-straight day, supported by favorable sentiment from its better-than-expected Gross Domestic Production data (GDP). The CAC advanced 0.3% even as its GDP data missed analyst’s estimates – mainly due to buying support in Sanofi after the latter raised its profit forecast for the year. The DAX, however, ended down 0.2% after German’s October inflation rose to the highest level in two years.

THE DAY AHEAD

We expect the FBM KLCI to maintain its holding pattern ahead of the upcoming FOMC meeting that starts on Tuesday as we well as the U.S. Presidential election at the end of next week. Although an interest rate hike is not expected at this week’s FOMC meeting, market participants will be on the lookout for leads from the Federal Reserve on the interest rate outlook.

Therefore, we expect market breadth to remain on the thin side with many market participants staying on the sidelines until a clearer market direction is found. This also means that the lower liners and broader market stocks will remain mixedto-lower over the near term.

We also think that the index heavyweights will remain mixed as the key index continues to tether on the 1,670 level and upsides will be limited amid the cautious market environment. The intermediate support remains at the 1,660 level, while the 1,680 is the major hurdle.

COMPANY BRIEFS

Benalec Holdings Bhd has decided not to proceed with the power supply infrastructure plan for the 1,410 ha. Tanjung Piai Integrated Petroleum and Maritime Industrial Park (TPIPMIP) that it was exploring with Pestech International Bhd. This decision comes two months after the lapse of their Memorandum of Understanding (MoU) that setting up was aimed at setting up the park’s water supply and sewerage treatment infrastructure.

The MoU, initially valid for six months, was extended twice (by six months each). Earlier, Benalec has agreed to study the feasibility to design, build and operate the infrastructure for power supply at TPIPMIP under the Independent Distribution License (IDL) scheme. However, the feasibility studies done found that the IDL model was not preferred for the development of TPIPMIP. No reason was given for rejecting the model. (The Star Online)

Tan Sri Lodin Wok Kamaruddin has ceased to be deputy chairman of Affin Holdings Bhd after more than eight years in the position. Lodin, 67, stepped down due to completion of directorship. There was no announcement of his successor or why his contract was not renewed. Tan Sri Lodin is, at present, the chairman of Boustead Heavy Industries Corp Bhd, Boustead Petroleum Marketing Sdn Bhd, Pharmaniaga Bhd and MHS Aviation Bhd as well as the Deputy Chairman and Group Managing Director of Boustead Holdings Bhd. (The Star Online)

Perusahaan Sadur Timah Malaysia Bhd’s (Perstima) 2QFY17 net profit slipped 5.9% Y.o.Y to RM13.3 mln, due to lower profit margin. Revenue for the quarter, however, gained 12.8% Y.o.Y to RM199.4 mln. For 1HFY17, cumulative net profit rose 7.1% Y.o.Y to RM25.0 mln. Revenue for the period added 12.1% Y.o.Y to RM375.7 mln. (The Edge Daily)

Sinotop Holdings Bhd has appointed Datuk Justin Soo Sze Ching as Executive Director on 28th October 2016 after he became a substantial shareholder in the fabric manufacturer.

Soo, via his private company Noble Pinnacle Sdn Bhd, has acquired 300.0 mln shares or a 15.2% stake in the company on 21st October 2016 via an off-market deal. Soo began his career as a civil engineer who had served various construction companies. (The Edge Daily)

APM Automotive Holdings Bhd has formed a 60:40 joint venture (JV) with Japan's Delta Kogyo Co Ltd to develop automobile seating system for Mazda cars. The investment in the JV company will be financed through internally generated funds. The move creates the opportunity for the JV company to supply completely knocked-down (CKD) seats, seat frames and components into the Asean market. (The Edge Daily)

TMC Life Sciences Bhd's 4QFY16 net profit jumped 103.1% Y.o.Y to RM5.9 mln due to higher interest income coupled with the absence of higher corporate exercise cost incurred in the previous corresponding quarter. Revenue for the quarter gained 12.4% Y.o.Y to RM33.8 mln.

For FY16, cumulative net profit improved 62.0% Y.o.Y to RM20.8 mln. Revenue for the year gained 21.2% Y.o.Y to RM161.5 mln. A single-tier final dividend of 0.1 sen per share was announced. (The Edge Daily)

Lembaga Tabung Haji (LTH) has emerged as a substantial shareholder in piling and engineering specialist Ikhmas Jaya Group Bhd after purchasing 26.9 mln shares or 5.2% stake in the company. LTH bought the stake via direct transaction on 25th October2016. (The Edge Daily)

Petrol One Resources Bhd’s external auditors, Messrs Baker Tilly Monteiro Heng have expressed a disclaimer opinion in the Practice Note 17 (PN17) company’s latest financial statements for FY16. The auditors said they were unable to obtain sufficient audit evidence to support the carrying value of the group's marine equipment worth US$0.6 mln (RM2.5 mln), which has not been in use since the disposal of the vessel owned by a subsidiary, One Petroleum (L) Ltd.

It was also unable to ascertain the appropriateness of the carrying value of investments in subsidiaries and amount due from subsidiaries RM0.9 mln and RM66.4 mln respectively in the books of the company, as the projection of future cash flows prepared by the management to support those values were based on assumptions that its proposed regularisation plan have been implemented. (The Edge Daily)

Source:M+ Online Research - 31 Oct 2016