• Tracking the positive developments on Wall Street overnight, the FBM KLCI (+0.2%) advanced for the second straight session in tandem with gains in key regional indices. However, the lower liners – the FBM Small Cap (-0.2%) FBM Fledgling (-0.4%) and FBM ACE (-1.0%) all extended their losses, while the broader market closed mixed.

• Market breadth remained negative as losers outpaced gainers on a ratio of 414- to-283 stocks. Traded volumes fell 4.6% to 1.04 bln shares amid the mostly negative market environment.

• Petronas Gas (+18.0 sen) led the FBM KLCI advancers list, followed by Axiata (+12.0 sen), Genting Malaysia (+9.0 sen), Maxis (+7.0 sen) and KLK (+4.0 sen). Leading the gainers on the broader market include United Plantations (+68.0 sen), Heineken (+36.0 sen), Ajinomoto (+30.0 sen), Chin Teck Plantations (+13.0 sen) and Lafarge (+16.0 sen). Yongtai added 3.0 sen to close at a fresh record high.

• In contrast, Dutch Lady (-14.0 sen), Pharmaniaga (-20.0 sen), Panasonic (- 18.0 sen), Tasek Corporation (-18.0 sen) and IJM Plantations (-14.0 sen) were among the biggest decliners on the broader market. The top five declining key index stocks were BAT (-64.0 sen), Hong Leong Bank (-14.0 sen), PPB Group (-10.0 sen), AmBank (-5.0 sen) and SapuraKencana Petroleum (-4.0 sen).

• Asia benchmark indices advanced yesterday as the Nikkei added 0.7% as SoftBank soared 6.2% after unveiling its plan to invest US$50.0 bln in U.S. companies. The Hang Seng Index climbed 0.6% on gains in financial shares, while the Shanghai Composite Index (+0.7%) snapped a streak of three consecutive sessions of losses. ASEAN stockmarkets, meanwhile, ended mostly higher.

• U.S. stockmarkets rallied to close at another record high overnight as the Dow jumped 1.6% after the heavy selloff in bonds eased. Similarly on the broader market, the S&P 500 gained 1.3% with only the healthcare sector (-0.8%) underperforming, while the Nasdaq closed 1.1% higher.

• European stockmarkets also advanced – the FTSE (+1.8%), CAC (+1.4%) and DAX (+2.0%) all rallied to their highest levels in two-months, driven by gains in banking shares. The positive market sentiment was also boosted by expectations from the European Central Bank to extend its stimulus measures in the Eurozone.

The Day Ahead

• Despite the still broadly negative market undertone, the FBM KLCI managed to gain some headway yesterday in what is seen as the start of the year-end window dressing activities with domestic funds also taking advantage of the positive regional market performance to shore up the prices of index heavyweights. At the same time, the foreign selling is also abating, which eases the window dressing activities.

• While we maintain the view that the general market environment will remain insipid ahead of the upcoming FOMC meeting that is likely to see an interest rate hike, the FBM KLCI could still head higher over the near term as the window dressing activities continue after the 1,630 level was cleared yesterday. Nevertheless, we think the upsides could be tentative as bouts of quick profit taking activities will limit the upsides, in our view. Above the 1,630 support, the next key resistance is at the 1,640 level.

• Stocks in the broader market and lower liners are still expected to see a mixed-tolower environment as retail players continue to avoid the market due to the lack of a sustainable direction on Bursa Malaysia. MACRO NEWS

• Malaysia's October exports fell 8.6% Y.o.Y to RM69.20 bln, mainly on lower oil and gas-related and timber-based sales. In particular, liquefied natural gas exports dropped 40.2% Y.o.Y, while crude oil sales declined 27.9% Y.o.Y.

• Imports also declined 6.6% Y.o.Y to RM59.49 bln as the nation bought less intermediate, consumption and capital goods.

• Malaysia's October export and import numbers translated into total trade of RM128.6 bln, a decline of 7.7% Y.o.Y.

Company Briefs

• Astro Malaysia Holdings Bhd's 3QFY17 net profit jumped 42.4% Y.o.Y to RM151.0 mln due to lower depreciation charged and lower net finance cost. Quarterly revenue was up by 3.6% Y.o.Y to RM1.42 bln, from RM1.37 bln in 3QFY16. The group has also declared a third interim dividend of three sen per share, which will be paid on the 6th January 2017.

• Cumulative 9MFY17 net profit grew 16.3% Y.o.Y to RM478.6 mln, compared to RM411.6 mln a year ago, while revenue rose 3.5% Y.o.Y to RM4.22 bln, from RM4.07 bln. (The Edge Daily)

• Tenaga Nasional Bhd (TNB) has announced that the Inland Revenue Board (IRB) will not commence any proceedings against the former in relation to notices of additional assessment totaling RM2.07 bln, until the matter is determined by the special commissioners of income and the High Court on subsequent appeal.

• The agreement was made following the consent judgment entered into by the two parties at the High Court on 7th December 2016 to substitute judicial review proceedings on the RM985.6 mln notice for 2013 and RM1.08 bln notice for 2014, by filing an appeal to the special commissioners.

• To recap, IRB had approved in principal, TNB's reinvestment allowance claim for the years of assessment 2013 and 2014 on 7th December 2015. However, the approval was subsequently revoked by the IRB on the basis that TNB was not in the manufacturing business, which IRB allowed exemptions for. (The Edge Daily)

• Selangor Dredging Bhd (SDB) is planning to acquire a S$47.0 mln (RM147.0 mln) freehold property from National Aerated Water Company Ltd, via its 50% indirectlyowned associate company Tiara Land Pte Ltd. The acquisition and the development of the property will be funded through a combination of internal funds and bank borrowings.

• The 2,945.5 sq.m. (31,705 sf) property situated in in Serangoon Road, Singapore is an established city fringe residential location, connected to reputable primary schools and is near shopping, dining and recreational amenities. (The Star Online)

• Perdana Petroleum Bhd announced that its decision to cancel its Memorandum of Agreement (MoA) with Nam Cheong International Ltd was deemed unlawful by the latter. Consequently, Nam Cheong will forfeit the deposit worth $8.4 mln, however, Perdana Petroleum is currently seeking legal advice on the matter.

• To recap, Perdana Petroleum had, on 1st December 2016, aborted its plans to buy SK 317 after Nam Cheong failed to fulfil the condition of delivery of the vessel in accordance with the terms and conditions of the MoA. (The Star Online)

• Tanjung Offshore Bhd is diversifying its operations into the aerospace industry by inking a Memorandum of Understanding (MoU) with UK-based aerospace components manufacturer, Kilgour Metal Treatments Ltd to pursue business opportunities in metal treatments.

• Under the MoU, both parties will carry out metal surface treatment, chemical processing, non-destructive testing (NDT) activities and coating applications for components which will be exported to Southeast Asian markets.

• Moving forward, Tanjung Offshore and Kilgour have also indicated that they will jointly develop a metal treatment plant. The former is currently in discussion with UMW Holdings Bhd to build its plant within the latter's facility space in Serendah, Selangor. (The Star Online)

• CCM Duopharma Biotech Bhd has obtained a US$4.0 mln revolving credit facility from Sumitomo Mitsui Banking Corp to be utilised for working capital purposes. The loan facility is to be cross-utilised by its Philippines subsidiary, CCM International Philippines (CCMIP), as part of the latter’s loan refinancing plan.

• The loan carries a lower interest rate in U.S. dollars and will decrease CCMIP’s forex exposure in relation to the Philippine peso. (The Edge Daily)  

Source: Mplus Research - 8 Dec 2016