• The FBM KLCI opened sharply higher yesterday, but quick profit taking pared most of the key index’s intraday gains before settling just 0.2% higher. The lower liners – the FBM Small Cap (+0.4%), FBM Fledgling (+0.1%) and FBM ACE (+0.4%), all closed in the positive note, while the Technology sector (-0.2%) underperformed the positive broader market.

• Market breadth remained positive as gainers edged losers on a ratio of 418-to- 322 stocks. Traded volumes climbed 7.8% to 1.33 bln shares on bargain hunting among the beaten down lower liners.

• More than two-third of the key index constituents advanced, led by BAT (+28.0 sen), Petronas Dagangan (+24.0 sen), Hap Seng (+19.0 sen), MISC (+14.0 sen) and Public Bank (+8.0 sen). Significant gainers on the broader market were consumer products stocks like Dutch Lady (+96.0 sen), Nestle (+30.0 sen), Ajinomoto (+18.0 sen) and IQ Group (+17.0 sen), while United Plantations gained 80.0 sen.

• In contrast, amongst the biggest losers in the broader market were Apollo (-29.0 sen), Hume Industries (-20.0 sen), Sungei Bagan Rubber (-14.0 sen), KESM Industries (-10.0 sen) and Asia File (-9.0 sen). Meanwhile, Maxis (-9.0 sen), Telekom Malaysia (-7.0 sen), Petronas Gas (-6.0 sen), Axiata (-6.0 sen) and Genting Malaysia (-5.0 sen) topped the broader market decliners list.

• Asia benchmark indices ended higher yesterday as the Nikkei (+0.5%) advanced for the sixth straight session ahead of the U.S. central bank meeting. The Hang Seng Index added 0.1%, while the Shanghai Composite Index gained 0.1% on stronger-than-expected retail sales and industrial production data. ASEAN stockmarkets, meanwhile, ended mostly higher.

• Wall Street advanced overnight as the Dow (+0.6%) closed higher for the seventh straight session ahead of the widely anticipated interest rate hike by the U.S. Federal Reserve in its two-day FOMC meeting. Similarly, both the S&P 500 and Nasdaq gained 0.7% and 1.0% respectively to close at record high levels.

• Earlier, European benchmark indices – the FTSE (+1.1%), CAC (+0.9%) and DAX (+0.8%) all recovered their previous session’s losses as Italy’s biggest bank, UniCredit announced plans to axe 14,000 jobs to combat the country’s banking crisis. Meanwhile, U.K.’s inflation rate in November rose 1.2% Y.o.Y, beating economists’ estimates of1.1% rise.

The Day Ahead

• Global market participants have largely priced-in a U.S. interest rate hike, in our view, as stockmarkets see the rate hike as a sign of confidence that the global economy is turning the corner and could see a stronger recovery in 2017. The positivity is also helping to shore up the local market and has allowed the key index to stage the ongoing window dressing activities.

• With the positivity sustaining, we also think the window dressing activities will persist on Bursa Malaysia over the near term as foreign funds are returning, albeit the funds flow is still minute – a sign that the selling pressure has largely dissipated. We also think oil & gas stocks could see a revival in tandem with the recovering prices that could lift the key index past the 1,650 resistance level over the near term.

• There is also no change is our view that that selected lower liners and broader market stocks are likely to see renewed interest as retail players will continue to undertaking trading activities amid the calmer short-term market environment.

Company Briefs

• Glomac Bhd's 100.0%-owned subsidiary Glomac Regal Sdn Bhd (GRSB) has received a winding-up order for the alleged non-payment of RM3.5 mln to Bina Goodyear Bhd. Bina Goodyear is the contractor for Glomac's high-rise residential project along Lorong Stonor in Kuala Lumpur and has filed the windingup petition at the High Court on 25th November, 2016.

• Glomac is currently negotiating with the petitioner for a settlement and will also file for a permanent stay to set aside the winding up order. (The Edge Daily)

• PDZ Holdings Bhd has announced the resignation of its Non-Independent and Non-Executive Director, Aminuddin Yusof Lana before yesterday’s extraordinary general meeting (EGM) that was called to remove him from the company’s board.

• Further, another resolution calling for Messrs Cheng & Co to be appointed as the new auditors of the company was passed at the meeting.

• To recap, PDZ received a notice of requisition for an EGM from Pelaburan Mara Bhd and Kua Khai Loon, with the intention to remove Aminuddin as its director on 14th November 2016. (The Edge Daily)

• Kuantan Flour Mills Bhd (KFM) announced that the Federal Land Consolidation and Rehabilitation Authority (Felcra) is planning to undertake a reverse takeover (RTO) of the company to turnaround its existing business.

• Felcra will be assessing the feasibility of injecting a suitable profit-generating asset into KFM to facilitate the turnaround of its existing business and the regularisation out of its Practice Note 17 (PN17) status as well as generate suitable return and synergistic value creation to Felcra. (The Edge Daily)

• IHH Healthcare Bhd has decided to set up a Sino-foreign equity company - Parkway Health Chengdu Hospital Co Ltd to provide specialised care and services. The group has secured a 20-year business licence on 12th December 2016 from the Chengdu Administration of Industry and Commerce for the establishment of the company following its 70:30 joint-venture (JV) contract with Shanghai Broad Ocean Investments Co Ltd on 15th August 2016. (The Star Online)

• Magni-Tech Industries Bhd is shutting down its 99.6%-owned printing packaging products manufacturing unit, South Island Packaging (Penang) Sdn Bhd (SIPP), in a bid to streamline the group’s operations after a streak of poor performance from the latter. SIPP will sell off all its assets except for the factory building and leasehold land. (The Edge Daily)

• Boon Koon Group Bhd is planning to sell its remaining 25.0% shareholding in Hitachi Capital Malaysia Sdn Bhd for RM22.0 mln to Hitachi Capital Asia Pacific Pte Ltd, as it does not fit into its long-term strategy.

• To recap, the group sold its 75.0% stake in Hitachi Capital Malaysia to Hitachi Capital Asia for RM9.0 mln in October 2011.

• According to Boon Koon’s latest FY16 audited accounts, the net asset value of the 25.0% equity interest in Hitachi Capital is RM5.2 mln. (The Edge Daily)

• Axiata Group Bhd and its wholly-owned subsidiary, edotco Group Sdn Bhd have inked a US$600.0 mln (about RM2.7 bln) primary and secondary equity private placement deal with Japan-based Innovation Network Corporation of Japan (INCJ) and Khazanah Nasional Bhd.

• Axiata and edotco have entered into a binding term sheet with INCJ to raise up to US$400.0 mln in a private placement of new edotco shares with a par value of RM1.00 each.

• Meanwhile, Axiata will sell off edotco shares to Khazanah for US$200.0 mln. The related agreements are slated to be signed and finalised by January 2017 with Axiata still remaining as majority shareholder of edotco's shares, post the above transactions. (The Star Online)  

Source: Mplus Research - 14 Dec 2016