• The FBM KLCI ended marginally higher by 0.1%, amid the weakening Ringgit – led by buying support in telco and banking heavyweights, although the key index fell 0.2% W.o.W to 1637.8 points. The FBM Small Cap and the FBM Fledging finished up by 0.1% and 0.2% respectively, while the FBM Ace flatlined. Meanwhile, majority of the broader market finished in the positive territory on Friday’s close.

• Market breadth was negative as decliners edged the winners on a ratio of 392-to- 360. Traded volumes, however, jumped 8.2% to 1.31 bln shares, amid buyinginterest in the lower liners.

• Significant key-index gainers were Axiata (+18.0 sen), Public Bank (+14.0 sen), Genting Malaysia (+9.0 sen), RHB Bank (+5.0 sen) and Telekom Malaysia (+5.0 sen). Broader market chart-toppers were Dutch Lady (+90.0 sen), Heineken Malaysia (+20.0 sen), Kobay Technology (+15.0 sen), Apollo Food Holdings (+14.0 sen) and Oriental Interest (+12.0 sen).

• Meanwhile, other broader market decliners include Batu Kawan (-60.0 sen), Hong Leong Industries (-23.0 sen), Scientex (-14.0) and Hartalega (-13.0 sen). Kuantan Flour Mill fell 15.0 sen after the Federal Land Consolidation and Rehabilitation Authority Bhd (Felcra) aborted its proposed reverse takeover of the former. The five decliners on Bursa Malaysia were BAT (-RM1.1), Kuala Lumpur Kepong (-22.0 sen) PPB Group (- 20.0 sen), trailed by financials-related shares like Hong Leong Financial Group (- 14.0 sen) and Hong Leong Bank (-12.0 sen).

• Regional benchmark stockmarkets finished mostly higher last Friday, as the Nikkei expanded 0.7% to 19,405.2 points, buoyed by the weaker Yen, which lifted export-related counters. Similarly, the Shanghai Composite Index advanced – rising 0.2% to close above the 3122.0 psychological levels. The Hang Seng Index, however, fell 0.2% with 3 out-of-4 sectors in red. Meanwhile, majority of the ASEAN stockmarkets ended on an optimistic tone.

• U.S. equities traded mostly lower after China has seized an underwater U.S. drone, stoking fears of geopolitical tension between both countries. The Dow (-0.04%) was marginally down, on the back of losses in the Caterpillar (-2.1%) and Goldman Sachs (-1.7%). On the broader market, the S&P 500 lost 0.2% as financials-related shares declined, while the Nasdaq gave up 0.4% to close at 5,437.2 points.

• European shares finished higher last Friday, as investors digest the recent U.S. interest rate hike. The FTSE breached the 7000.0 psychological level, closing 0.2% higher after trimming earlier losses as healthcare, energy and industrial stocks advanced, while, the CAC and the DAX rose 0.2% each.

The Day Ahead

• Despite the late buying support on the key index on last Friday, we expect the local bourse to trend marginally lower, taking cue from the weakness in Wall Street. The insipid market environment still prevalent, owing to the extended weakness in the local currency against the Greenback.

• This implies that the market breadth is likely to remain negative as investors continue to adopt the risk-off approach. We, however, expect trading sentiment to be centered towards oil & gas stocks after crude oil prices staged a recovery above the US$50 per barrel level.

• As local institutions could provide some support, any upside could be capped towards the 1,650 level is the immediate resistance in lieu of the lack of local catalyst whilst the downside at the 1,630 level remains unchanged.

Company Briefs

• Puncak Niaga Holdings Bhd’s 98.7%- owned Sino Water Pte Ltd, is disposing of its 93.8% stake in Chinese water treatment firm Luwei (Pingdingshan) Water Co Ltd, to Environmental Holding Pte Ltd and Lushan Country Chengnan Water Co Ltd, for zero cash consideration and RMB10.0 mln (RM6.2 mln) settlement of Sino Water’s shareholders' loan.

• The stake disposal in Luwei was effected by way of an equity transfer agreement inked by Sino Water with Environmental Holding and Lushan Country on 16th December 2016. The proposed disposal is expected to be completed in 2Q2017.

• Separately, Puncak Niaga has entered into a conditional share sale agreement with Pimpinan Ehsan Bhd to purchase the entire issued and paid-up share capital of TRIplc Bhd for RM210.0 mln cash. The rationale for the acquisition is to enhance its construction revenue and long-term growth prospects and that of its subsidiaries. (The Edge Daily)

• Heitech Padu Bhd has won a contract for transmission line engineering works in Kota Baru, Kelantan, worth RM2.3 mln from Tenaga Nasional Bhd (TNB) via its unit Duta Technic Sdn Bhd. The job is for civil and structural works and supply of double circuit transmission towers to facilitate looping in and out for the proposed 132kV single circuit loop in/out into main intake substation Tunjung From Kota Bharu — Tanah Merah Transmission Line. ? Heitech Padu is required to complete the works within 364 days and remedy any defects or damage within the defects notification period of 12 months from the day of handing over of the project to TNB. (The Edge Daily)

• Prolexus Bhd’s 1QFY17 net profit contracted 16.7% Y.o.Y to RM6.4 mln, mainly due to slower sales. Revenue for the quarter dropped 16.4% Y.o.Y to RM87.5 mln. (The Edge Daily)

• JKG Land Bhd has proposed a rights issue of 1.50 bln shares on the basis of two rights shares for one share to raise RM151.7 mln for (i) its property development projects and expansion plans, (ii) repayment of RM25.0 mln of its short-term bank borrowings and (iii) utilise RM10.7 mln as working capital.

• To accommodate the rights issue, it proposes to increase its authorised share capital from RM100.0 mln of 1.00 bln shares to RM500.0 mln comprising 5.00 bln shares. The issue price is expected to be at up to 40.0% discount to the theoretical ex-rights price (TERP) of the shares immediately preceding the pricefixing date but would not be lower than the par value of JKG shares of 10.0 sen. (The Edge Daily)

• Xin Hwa Holdings Bhd has secured its shareholders' approval for a proposed 1- for-5 bonus issue, which it expects to complete by mid-January 2017 on a date which will be decided later. On completion of the proposed bonus issue, Xin Hwa will have an enlarged issued and paid-up share capital of RM108.0 mln (up from RM90.0 mln), comprising 216.0 mln ordinary shares (up from 180.0 mln shares). (The Edge Daily)  

Source: Mplus Research - 19 Dec 2016