• The FBM KLCI closed down 0.2%, dragged down by the negative sentiment spill-over from regional stockmarkets. Both the FBM Small Cap (+0.6%) and the FBM Ace (+0.4%) advanced, with the exception of the FBM Fledging which retreated 0.2% to 15,766.48 pts. On the other hand, the broader market bucked the general tepid sentiment to close mostly higher.

• Market breadth was depressed as losers outweigh the advancers on a ratio of 401- to-307. Traded volumes rose slightly by 1.9% to 1.31 bln shares, on the back of mild profit-taking activities ahead of the Christmas break.

• Petronas Dagangan (-20.0 sen) topped the decliners list on the big board, followed by Axiata (-14.0 sen), Kuala Lumpur Kepong (-14.0 sen), Public Bank (-6.0 sen) and Tenaga Nasional (-6.0 sen). Notable losers on the broader market were Dutch Lady (-98.0 sen), Lafarge Malaysia (-21.0 sen), Prolexus (- 12.0 sen), Metrod (-10.0 sen) and Suiwah (-10.0 sen).

• Meanwhile, Batu Kawan (40.0 sen), Panasonic Manufacturing (+22.0 sen), Apollo Food (+16.0 sen) and Teck Guan Perdana (+15.0 sen) were amongst the biggest gainers on the broader market. Rhone Ma rose 12.0 sen on its listing debut. Key winners on the big board include BAT (+34.0 sen), Hong Leong Financial Group (+20.0 sen), PPB Group (+10.0 sen), Hong Leong Bank (+6.0 sen) and Sime Darby (+6.0 sen).

• Japanese equities ended mostly lower, amid the Bank of Japan’s two-day policy meeting on Monday. The Nikkei (-0.1%) snapped its nine consecutive days of gains, weighed down by the financials, telecommunication services and information technology sectors. Meanwhile, Hong Kong’s Hang Seng Index (-0.9%) retreated to its lowest levels since July 2016, as capital outflows from Hong Kong stockmarket persisted, ahead of further U.S. interest rates hike in 2017. The Shanghai Composite Index also fell 0.2% to 3,118.1 pts, together with the weakening Yuan and higher Chinese borrowing costs. Meanwhile, ASEAN stockmarkets ended broadly lower on Monday’s closing bell.

• Wall Street retreated from intraday-highs, albeit closing in the positive territory, alongside the stronger Greenback – fuelled by the hawkish expectations of monetary policy from Federal Chairwoman Janet Yellen. The Dow rose 0.2% to close just below the 20,000 psychological level, on the back of gains in United Technologies and Microsoft, which rose 0.2% each. Meanwhile, the S&P 500 and the Nasdaq also advanced 0.2% and 0.4% respectively.

• Earlier, U.K. stockmarkets ended flattish, amid thin trading ahead of the Christmas break. The FTSE increased marginally by 0.1% - led by the weaker Pound, which boosted export-related shares, while the DAX rose 0.2% to 11,426.7 pts. The CAC, however, fell 0.2%, dragged down by banking stocks.

The Day Ahead

• The FBM KLCI continues to trade at a lacklustre manner yesterday in-tandem with the weakness across key regional indices as the hawkish interest rate comments from the US Federal Reserve last week prompt investors to pare their equity holdings. We think that the market’s weakness is also likely to extend over the near term with the fewer positive catalysts.

• Meanwhile, lower liners and broader market stocks will continue to endure a mixed-to-lower performance as retail investors’ opt to close their positions ahead of the festive and year-end break. Nevertheless, trading activities will continue to be centred towards exportrelated stocks, as the Ringgit continues to lose ground against the Greenback.

• With sentiments remaining dour, the key index is likely to stay below the 1,650 level over the near term, albeit the downside risk will be cushioned by selective support from local institutions. This will also ensure that the key index will remain supported above the 1,630 level over the near term.

Company Briefs

• O&C Resources Bhd’s (OCR) 70.0%-owned subsidiary Kita Mampan Sdn Bhd, via 49.0% associate AES Builders Sdn Bhd, has been appointed by Perbadanan PR1MA Malaysia to undertake works on a project in Bukit Jalil, Kuala Lumpur worth about RM155.0 mln.

• AES Builders, the main contractor, would construct one block of office shoplots with four levels together with a health clinic and two blocks of apartments with a total of 53 units. The project also includes the construction of four levels of podium parking, one multi-purpose hall and a public facility. Based on its 34.3% equity interest held in AES Builders, the estimated profit attributable to OCR from the project is about RM8.0 mln over the 36 months construction period. (The Star Online)

• Mudajaya Group Bhd has won a RM558.6 mln contract to construct a viaduct gateway for the Mass Rapid Transit Line 2 (MRT2) project. Its wholly-owned unit, Mudajaya Corp Bhd has accepted the award from Mass Rapid Transit Corp Sdn Bhd for the project covering the stretch from Universiti Putra Malaysia in Serdang to Taman Pinggiran Putra in Putrajaya. The project's construction period is 56 months. (The Edge Daily)

• Shell Refining Company (Federation of Malaya) Bhd has received a mandatory takeover offer from Malaysia Hengyuan International Ltd (MHIL), which is in the midst of buying over a 51.0% stake in the company, for the remaining 49.0% stake in the refinery for RM1.92 per share.

• The cash offer represents a 61.21% discount to the five-day volume-weighted average price of Shell Refining, up to and including 29th January 2016 of RM4.95. The offer price is also 16.2% less than Shell Refining's closing price of RM2.29 on 19th December 2016.

• The offer was triggered after MHIL's conditional sale and purchase agreement for 51.0% of Shell Refining, signed in February 2016 with Shell Overseas Holdings Ltd, turned unconditional on 19th December 2016. To recap, MHIL has offered to buy the 51.0% stake in the refinery company for US$66.3 mln (RM293.8 mln), or 43 cents (RM1.92) a share for 153.0 mln ordinary shares. (The Edge Daily)  

Source: Mplus Research - 20 Dec 2016