• Despite opening higher at the start of the trading bell, quick profit taking sent the FBM KLCI (-0.1%) to erase most of its previous session gains ahead of the U.S. monetary policy meeting. The lower liners, however, closed mostly higher as the FBM Small Cap and FBM Fledgling rose 0.3% each, while the Technology (+0.2%), Plantations (+0.1%) and Mining (+0.9%) sectors underperformed in the negative broader market.

• Market breadth turned negative as gainers outnumbered losers on a ratio of 362-to-314 stocks. Traded volumes added 7.5% to 1.44 bln shares on rotational play amongst the lower liners.

• Among the biggest decliners on the big board were PPB Group (-26.0 sen), Petronas Gas (-12.0 sen), Tenaga (-6.0 sen), Genting Malaysia (-6.0 sen) and MISC (-4.0 sen). Meanwhile, Dutch Lady (- 22.0 sen), Lafarge (-22.0 sen), Hong Leong Industries (-16.0 sen), UEM Edgenta (-14.0 sen) and Riverview (-11.0 sen) were among the biggest decliners on the broader market.

• Notable gainers on the broader market include United Plantations (+54.0 sen), Heineken (+20.0 sen), OWG (+15.0 sen) and Oriental Holdings (+13.0 sen). Kuantan Flour Mills jumped 16.5 sen after Federal Land Consolidation and Rehabilitation Authority is planning to undertake a reverse takeover (RTO). Meanwhile, BAT (+42.0 sen), Axiata (+6.0 sen), Genting (+6.0 sen), Hong Leong Bank (+2.0 sen) and Astro (+1.0 sen) topped the key index gainers list.

• Despite a weaker-than-expected Industrial Production data, the Nikkei (+0.02%) recorded its seventh consecutive day of gains after enduring a choppy trading session. The Hang Seng Index climbed 0.04%, but the Shanghai Composite Index fell 0.5% on concerns over the outlook of the property development market. ASEAN stockmarkets, meanwhile, ended mixed.

• U.S. stockmarkets retreated from their record high levels after the U.S. Federal Reserve raised its interest rate for the second time in a decade by 25 basis points, whilst signalling a faster-thanexpected pace of increase – potentially an additional three rate hike in 2017. The Dow fell 0.6%, while the S&P 500 ended 0.8% lower with all 11 main sectors in the red.

• Similarly, European benchmark indices – the FTSE (-0.3%), CAC (-0.7%) and DAX (- 0.4%) all ended lower ahead of the widely anticipated rate hike by the U.S. Federal Reserve. Greek stocks slid as the Athens Stocks Exchange tanked 3.2% on concerns over the country’s bailout issue, coupled with possibility of an early election.

The Day Ahead

• Although last night’s interest rate hike was widely anticipated, the probability of steeper hikes next year is causing some jitters among market participants as it also marks the new cycle of normalisation and the end of the easy monetary environment that has extended for nearly nine years.

• As market participants digest to the new rates, we see further profit taking on Bursa Malaysia over the near term, in tandem to the weakness on most global indices overnight. Currency sensitive industries will be in focus as the U.S. Dollar continues to gain strength.

• Still, we think the downside could be cushioned by the ongoing window dressing activities with the key index likely to find firm support at the 1,640 level for now, while on the upside, the 1,650 level is the immediate resistance.

• We also see quick profit taking activities extending among the lower liners and broader market shares as retail players are likely to move to the sidelines again as they await for a clearer market direction.

Company Briefs

• Pos Malaysia Bhd is partnering Etiqa Takaful Bhd to jointly offer a pioneer family takaful plan, Pos Khairat Takaful, which will be available at 700 Pos Malaysia outlets nationwide. The partnership is expected to generate about RM10.0 mln worth of premiums. Todate, 4,996 certificates with a total contribution of RM331,420 have been issued. Moving forward, the group targets to cover more than 160,000 participants next year by offering the Khairat plan to all Pos Malaysia's customers, aged between 18 and 70. (The Star Online)

• Dolphin International Bhd has proposed to diversify its business into the renewable energy segment for additional income stream via a joint-venture (JV) with Seri Ulu Langat Palm Oil Mill Sdn Bhd (SULPOM). Under the JV, Dolphin will acquire Biogas Sulpom Sdn Bhd (BSSB) for RM300,000 from SULPOM, Yap Hai San and Datuk Azlim Sarbani, while SULPOM will subscribe to a 10.0% shareholding in Dolphin for RM50,000. Further, SULPOM will also have the option to purchase an additional 10.0% stake in Dolphin within five years.

• BSSB has secured the feed-in tariff approval from the Sustainable Energy Development Authority of Malaysia on 7th October, 2014 for a 2MW biogas plant. The renewable energy produced from the plant will be sold to Tenaga Nasional Bhd for 16 years once the plant is commissioned. (The Edge Daily)

• Malayan Banking Bhd (Maybank) has introduced a Sukuk Programme with a nominal value of up to RM10.0 bln to finance its Islamic subsidiaries' business operations, overseas branches, and any other syariah-compliant business activities of the group.

• The group has submitted all required documents related to the sukuk programme to the Securities Commission Malaysia (SC) on 22th November, 2016.

• Destini Bhd has clinched a three-year contract extension to provide maintenance, repair and overhaul (MRO) services and supply services of safety and survival equipment to the Royal Malaysian Air Force totaling RM98.2 mln. The contract, which was awarded by the Ministry of Defense, will also require Destini to provide on-site technical assistance at selected Air Force bases that may be required on a day-to-day basis. (The Edge Daily)

• Fraser & Neave Holdings Bhd’s (F&N) new polyethylene terephthalate (PET) bottling manufacturing line at its plant in Shah Alam is expected to ramp up its bottle production by 40.0% or eight mln cases annually. The line, which cost about RM45.0 mln, was operational since June 2016 and has improved F&N’s production efficiency and significantly decreased the group’s carbon footprint as well as prebottling storage as the bottles are blown and formed in-situ. (The Edge Daily)

• Luster Industries Bhd‘s Managing Director, Gary How Soong Khong has tendered his resignation just six months after he was appointed to the position.

• His resignation also came following Luster's announcement on 1st December 2016 that it had terminated its Memorandum of Understanding (MoU) with Citi-Champ International Ltd, How's private company in Hong Kong. No reason was given for the termination.

• Under the MoU, Luster has proposed the acquisition of Citi-Champ's whollyowned unit, New Harvest Asia Investment Ltd, which was in the process of buying a start-up company that owns taxi-hailing mobile app, Fly Taxi. (The Edge Daily)  

Source: Mplus Research - 15 Dec 2016