• Following the U.S. Federal Reserve’ move to hike its interest rate by 25 basis points, the FBM KLCI (-0.4%) extended its losses as the Ringgit losses ground against the Greenback. The lower liners, however, extended their gains – the FBM Small Cap (+0.2%), FBM Fledgling (+0.2%) and FBM ACE (+0.7%) all rose, while the Consumer Products (+0.3%), Technology (+0.4%) and Plantations (+0.2%) sectors outperformed in the negative broader market.

• Market breadth stayed negative as gainers edged losers on a ratio of 376-to- 351 stocks. Traded volumes fell 15.7% to 1.21 bln shares as profit taking activities took precedence.

• More than two-third of the key index constituents fell, dragged down by BAT (- RM1.18), followed by Hong Leong Financial Group (-26.0 sen), Petronas Gas (-22.0 sen), MISC (-8.0 sen) and RHB Bank (-7.0 sen). Notable losers of the day werer United Plantations (-28.0 sen), Heineken (-20.0 sen), Lafarge (-20.0 sen), Dutch Lady (-12.0 sen) and Oriental Holdings (-11.0 sen).

• Amongst the biggest gainers on the broader market were consumer products stocks like Nestle (+RM1.90), Ajinomoto (+36.0 sen), Panasonic (+20.0 sen), MSM (+11.0 sen) and Lii Hen (+13.0 sen). There were only five advancers on the big board – KLK (+20.0 sen), PPB Group (+18.0 sen), Petronas Dagangan (+12.0 sen), KLCC (+2.0 sen) and Hap Seng (+1.0 sen).

• Japanese equities advanced yesterday as the Nikkei (+0.1%) logged its eighth straight winning streak, lifted by weaker Japanese Yen. The Hang Seng Index slipped 1.8% as it re-tested the 22,000 psychological level, while the Shanghai Composite Index fell 0.7% on concern over its property market outlook. ASEAN stockmarkets, meanwhile, ended mostly lower.

• Wall Street advanced overnight as the Dow added 0.3% after the inflation rate in November grew 1.7% Y.o.Y – in line with economists’ expectations. On the broader market, both the S&P 500 and Nasdaq rose 0.4% each as the former was led by the financial sector (+1.0%).

• European benchmark indices – the FTSE (+0.7%), CAC (+1.1%) and DAX (+1.1%) all recovered their previous session losses after the U.S. Federal Reserve raised their benchmark interest rate for the second time in nearly a decade. Meanwhile, Bank of England held their interest rate unchanged at 0.25% and forecasted that the economy’s inflation rate to increase over the 2.0% target in 2017.

The Day Ahead

• After two days of profit taking that was induced by the widely anticipated U.S. interest rate hike, we expect the local bourse to trend marginally lower, mirroring the weakness across key regional indices. The selling pressure could also extend as foreign funds continue to trim their holdings across the emerging markets.

• Further downside, however, could be capped by the ongoing window dressing activities with the key index likely to find firm support at the 1,630 level for now, while on the upside, the 1,650 level is the immediate resistance.

• With market participants opt to remain on the sidelines for a clearer market direction, we think that trading activities will remain lackluster over the short-term period. Nevertheless, export-related industries could remain in the trading spotlight, taking cue from the weaker local currency against the U.S. Dollar.

Company Briefs

• Practice Note 17 (PN17) company, Kuantan Flour Mills Bhd (KFM) announced that the Federal Land Consolidation and Rehabilitation Authority (Felcra) has aborted its earlier plans to undertake an equity stake in the former, following a letter of retraction on 15th December, 2016. (The Star Online)

• Top Glove Corp Bhd posted a 42.9% Y.o.Y slump in its 1QFY17 net profit to RM73.3 mln, from RM128.3 mln last year – led by weaker profit from its operations, while revenue fell slightly by 1.8% Y.o.Y to RM785.6 mln, from RM800.3 mln last corresponding year.

• It was noted that sales volume was 7.0% Y.o.Y higher than the previous year, however it was offset by the 24.0% and 11.0% Y.o.Y hike in natural gas tariff and minimum wage respectively. (Bernama)

• Tenaga Nasional Bhd (TNB) is planning to focus on renewable energy (RE) and global expansion, together with smarter grid and value-added customer products.

• The group plans to invest domestically in solar, wind, biomass, biogas and mini hydro projects. Further, TNB is also offtaking 5,777 RE projects in Peninsular Malaysia.

• These growth pillars, formulated under a 10-year strategic plan, are based on major trends affecting the industry, i.e. the shift in economic power to Asia, technology disruptions, the end of cheap capital and evolving regulatory developments. (The Edge Daily)

• Gromutual Bhd has purchased six pieces of land in Batu Pahat, Johor, worth RM11.1 mln in cash consideration. The lands include a 3.6ha piece of freehold industrial land for RM3.5 mln and 8.58ha piece of agricultural land for RM7.6 mln. (The Edge Daily)

• YNH Property Bhd (YNH) has proposed to sell one of its medical institutions, Pantai Hospital Manjung in Perak to Pantai Medical Centre Sdn Bhd (PMC) for RM63.0 mln. The group is currently in talks with PMC for the proposed disposal of the fivestorey hospital facility. (The Edge Daily)

• Hiap Teck Venture Bhd narrowed its net loss in the 1QFY17 to RM958,000 vs a net loss of RM37.2 mln in 1QFY16, on the back of improved margins and a lower share of losses from a jointly controlled entity of RM25.2 mln in 1QFY17. Quarterly revenue fell 12.1% Y.o.Y to RM279.1 mln, from RM317.4 mln a year earlier.

• Moving forward, the group expects better margins and growth in the construction industry to support Hiap Teck’s growth. (The Edge Daily)

• Superlon Holdings Bhd posted a 5.0% Y.o.Y growth in its 2QFY17 net profit to RM5.0 mln, compared to RM4.8 mln last year, attributed by stronger earnings from its manufacturing division. Revenue, however, slipped marginally by 0.3% Y.o.Y to RM22.3 mln, from RM22.4 mln last preceding year. The group has declared a second single-tier interim dividend of 2.5 sen a share, payable on 19th January, 2017.

• Cumulative 1HFY17 net profit jumped 28.2% Y.o.Y to RM11.1 mln, from RM8.7 mln a year earlier, alongside revenue which was 7.8% Y.o.Y higher at RM47.9 mln, from RM44.5 mln a year ago. (The Edge Daily)

• TAS Offshore Bhd has clinched a contract for the sale of a landing craft (seagoing vessels used to convey infantry and vehicles from sea to shore) worth RM17.3 mln, which will be delivered in the 2Q2017.

• To recap, the group slipped into the red with a 1QFY17 net loss of RM1.1 mln, compared with a net profit of RM8.7 mln in 1QFY16, while revenue plummeted 97.0% Y.o.Y to RM2.3 mln, from RM75.5 mln. (The Edge Daily)  

Source: Mplus Research - 16 Dec 2016