• There was no reprieve for the FBM KLCI (- 1.1%) as the key index extended its losses yesterday, in line with the weakness in regional peers amid the continuous foreign fund outflow. Both the lower liners and the broader market were also splashed in red as the Industrial (- 1.6%) sector took the heaviest beating in the latter.

• Market breadth remained negative as losers thumped gainers on a ratio of 586- to-210 stocks. Traded volumes, however, declined 30.3% to 1.38 bln shares as investors were spooked by the broadly negative market sentiment and continued to stay away from the market.

• BAT (-RM1.00) topped the big board decliners list, followed by PPB Group (- 42.0 sen), Sime Darby (-14.0 sen), KLK (- 14.0 sen) and Hong Leong Financial Group (-14.0 sen). Among the biggest losers on the broader market were Heineken (-58.0 sen), LPI Capital (-34.0 sen), Amway (-30.0 sen) and Ajinomoto (- 24.0 sen). IOI Properties Group slipped 7.0 sen despite winning its bid for a development of a 1.1 ha. land parcel in the Marina Bay area for RM7.77 bln.

• Significant advancers on the broader market include Teck Guan (+14.0 sen), Gadang (+11.0 sen), MSC (+9.0 sen), Ta Ann (+9.0 sen) and George Kent (+8.0 sen). Meanwhile, MISC and Petronas Gas, whom both rose 2.0 sen each, were the only two winners on the FBM KLCI.

• The Nikkei (+1.7%) rose for the third straight session on the back of the weaker Japanese Yen, coupled with stronger–than-expected 3Q2016 preliminary GDP data that saw its economy rising 0.5% Q.o.Q – beating economists’ estimates of 0.2% Q.o.Q rise. The Shanghai Composite (+0.5%) gained on stabilising economic data, but the Hang Seng Index (-1.4%) slipped on selling pressure among properties shares. ASEAN stockmarkets, meanwhile, ended mixed.

• Wall Street ended mixed overnight as the Dow (+0.1%) rose for the sixth straight session to close at another record high. On the broader market, the S&P 500 endured a choppy trading session before closing 0.01% lower after the decline in technology sector (-1.7%) offsets the gains in the financial sector (+2.0%), while the Nasdaq was down by 0.4%.

• European benchmark indices - the FTSE (+0.35), CAC (+0.4%) and DAX (+0.2%) all rebounded after the European Dollar fell to its lowest level in 11-months against the Greenback. Notable gainers include banking shares like Barclays (+5.4%), Royal Bank of Scotland (+4.5%), UBS (+5.5%) and Deutsche Bank (+3.8%).

The Day Ahead

• After successive falls, it appears that the FBM KLCI is attempting to find some measure of support after it closed off its low yesterday, which is also the key index’s five-month low. This raises hope that the market may stage a short-term technical rebound to adjust from its bout of oversold, albeit market sentiments are still mostly on the cautious side.

• The previous few days’ selling also appears to be tapering after the constant selling by foreign funds and this could help the key index to find some near term stability. Still, we think any rebound will be measured as the buying is likely to be limited due to the weak market sentiments across both the institutional and retail segments with market breadth expected to remain tepid.

• For now, we think the rebound could lift the FBM KLCI to above the 1,620 level, but may be limited to the 1,630 level. The 1,600 points level remains the key intermediate support.

Company Briefs

• OSK Ventures International Bhd registered its second consecutive profitable quarter with a 3Q2016 net profit of RM5.5 mln against a net loss of RM10.1 mln in 3Q2015 – led by higher income as well as net fair value gain on financial instruments of RM4.2 mln. Revenue also jumped by more than three times from RM3.0 mln in the last corresponding period, to RM9.6 mln.

• Cumulative 1H2016 net profit stood at RM3.1 mln, from a net loss of RM15.3 mln in 1H2015, despite weaker revenue contribution which was down 6.5% Y.o.Y to RM27.2 mln. (The Edge Daily)

• Telekom Malaysia Bhd (TM) has inked a 15-year contract worth RM916.1 mln to provide digital terrestrial television broadcasting infrastructure, network facilities and related services to MYTV Broadcasting Sdn Bhd (MYTV) on 14th November 2016. The contract will be valid until end- 2030 with an option to extend.

• The service agreement will allow TM to take part in the transformation of the broadcasting industry in Malaysia, which aims to create a dynamic broadcasting sector that offers more choices in entertainment, interactive TV as well as high-quality informative programmes. (The Star Online)

• Raya International Bhd is planning to buy two oil tankers totalling RM6.0 mln from Sturgeon Asia Ltd and Straits Holdings Ltd to support its bunkering service business. The oil tankers which cost RM3.2 mln and RM2.8 mln respectively will be paid via the issuance of shares, and cash raised through proceeds from a proposed right issues with warrants.

• The proposed acquisition would enable the group to own and operate its own vessels instead of relying on chartered vessels, in line with its strategy to expand its asset base, strengthen its operating capabilities and widen its geographical coverage. (The Edge Daily)

• Southern Steel Bhd returned to the black with a 1QFY17 net profit of RM19.3 mln vs. a net loss of RM51.9 mln a year ago, owing to higher selling price and lower cost. Revenue, however, retreated marginally by 1.1% Y.o.Y to RM585.8 mln, from RM592.4 mln a year earlier.

• Moving forward, the group expects the market to stay uncertain and volatile due to higher material costs and softer market demand. (The Star Online)

• Hup Seng Industries Bhd’s 3Q2016 net profit slid 14.0% Y.o.Y to RM10.0 mln, in comparison to RM11.6 mln in the previous corresponding period, dragged by higher input costs, accelerating operating expenses and foreign currency fluctuations, although revenue grew 0.2% Y.o.Y to RM64.6 mln, from RM64.4 mln a year earlier.

• Moving forward, Hup Seng expects weaker earnings in view of the depressed global economy. However, the group will strive to maintain market share. (The Edge Daily)

• Al-Aqar Healthcare REIT is selling its commercial properties in Johor Bahru for RM100.0 mln in cash to Optimum Impress Sdn Bhd. The sale gain will be used to reduce debt and finance working capital and future acquisitions. The sale included a freehold land with a 27-storey hotel (Hotel Selesa) and 31-storey office block (Metropolis Tower).

• Al-Aqar's original cost of investment in these properties was RM87.2 mln on 15th May 2009. As at 31st December, 2015, the properties were collectively worth RM103.5 mln in its net book value. (The Star Online)  

Source: Mplus Research - 15 Nov 2016