• Tracking the gains on Wall Street overnight due to the upbeat manufacturing data from China and U.S., the FBM KLCI (+0.7%) recovered all of its previous session’s losses as the key index traded positively throughout the entire trading session yesterday. Both the lower liners and broader market also closed higher with the Industrial sector (+1.3%) topping the sub-sector gainers list.

• Market breadth remained positive as gainers outpaced losers on a ratio of 2- to-1 stocks. Traded volumes added 18.9% to 1.98 bln shares on the positive market sentiment.

• More than two-third the key index constituents rose, led by BAT (+40.0 sen), followed by Sime Darby (+30.0 sen), Hong Leong Financial Group (+12.0 sen), Petronas Chemicals (+12.0 sen) and Petronas Gas (+10.0 sen). Significant gainers on the broader market include UMS Holdings (+32.0 sen), Hong Leong Industries (+24.0 sen), Latitude Tree (+20.0 sen) and Innoprise Plantations (+12.0 sen). Favco added 2.0 sen after bagging four orders to supply tower cranes.

• Consumer products heavyweights like Nestle (-92.0 sen), Dutch Lady (-46.0 sen), Panasonic (-20.0 sen) and Apollo Foods (-12.0 sen) topped the broader market declines list, while Pharmaniaga fell 10.0 sen. Amongst the biggest decliners on the big board were Westports (-6.0 sen), KLCC (-6.0 sen), PPB Group (-2.0 sen), Petronas Dagangan (-2.0 sen) and IOI Corporation (-2.0 sen).

• Japanese equities resume trading as the Nikkei jumped 2.5% after the Manufacturing PMI data rose to 52.4 in December 2016 – the highest since December 2015. The Shanghai Composite rose 0.7%, taking cue from the gains on Wall Street overnight, but the Hang Seng Index fell 0.1% on profit taking in banking and properties shares. ASEAN stockmarkets, meanwhile, ended mostly higher.

• U.S. stockmarkets extended their gains after the US FOMC minutes meeting suggest a quicker pace of rate hike to offset the potential higher inflation under President-elect Donald Trump. The Dow rose 0.3%, while the S&P 500 added 0.6% as the latter saw all ten main sectors advancing.

• European benchmark indices closed on a flattish note as both the CAC and DAX rose 7 basis points each after the Markit Composite and Services PMI data rose above economists’ estimates. The FTSE added 0.1% after the U.K. construction PMI rose to 54.2 – rebounding from its pre-Brexit level.

The Day Ahead

• We see further near term upsides as Malaysian equities will continue to be buoyed by the positive trend in most overseas bourses. At the same time, there is also a healthy build-up in market breadth to near the 2.0 bln mark yesterday – an sign that the buying interest is returning after the lull last month.

• With market interest picking up, we see the key index breaking the 1,650 level over the near term, albeit the upside may become choppier as we expect some quick profit taking activities to slow down its ascend. As the near term market sentiments are generally positive, we also think the uptrend could prolong and the key index’s gains could extend to the 1,680 level in due course.

• In tandem with the renewed interest among the index heavyweights, we also see renewed interest among the lower liners and broader market shares over the near term as more retail players are enticed back into the market.

Company Briefs

• HSS Engineers Bhd (HSSEB) has announced that its associate, HSS Integrated Sdn Bhd's (HSSI) liability in the dispute with Malaysia Airports Holdings Bhd (MAHB) is limited to RM3.0 mln, being the amount covered by the professional indemnity insurance policy.

• The group does not expect any significant impact arising from the matter as the insurance premium for the professional indemnity insurance policy has already been fully paid for and accounted for in the financial results of the group.

• To recap, HSSEB said that it received a notice of arbitration pertaining to the Memorandum of Agreement (MoA) signed between HSSI and MAHB on 12th April 2010 for the development of the new LCC terminal and associated works at KL International Airport Sepang, Selangor Work Package EW02: Site Preparation, Earthworks and Main Drainage (Airside). MAHB plans to claim RM64.6 mln for an alleged breach of the MoA. (The Star Online)

• UMW Oil & Gas Corporation Bhd (UMWOG) has bagged an 18-month contract from Petronas Carigali to provide jack-up drilling rig services. The value of the contract, however, was not disclosed. (The Star Online)

• Bioalpha Holdings Bhd‘s proposed rights issue with free warrants has been oversubscribed by 22.1%. The group has received valid applications for 162.8 mln rights shares over the total number of 133.3 mln rights shares available for subscription.

• The proceeds of up to RM26.7 mln, based on the issue price of 20.0 sen per rights share, will be used to fund the group’s expansion plans. The group expects to complete the proposed exercise by 10th January 2017. (The Star Online)

• Ikhmas Jaya Group Bhd was awarded a piling and substructure work contract for two blocks of commercial building in Damansara, Selangor, from Symphony Crescent Sdn Bhd for RM37.7 mln. The project is targeted to be completed by 16th April 2018. (The Edge Daily)

• Asia Poly Holdings Bhd is planning to raise up to RM4.9 mln via a private placement of up to 36.0 mln shares based on an indicative price of 13.5 sen per share to fund the group’s working capital needs. (The Edge Daily)

• Gabungan AQRS Bhd has secured a RM361.0 mln subcontract from its 30%- owned associate, Kreatif Sinar Gabungan Sdn Bhd to undertake construction works for the proposed development of Pusat Pentadbiran Sultan Ahmad Shah in Kuantan, Pahang.

• The group will operate as a turnkey contractor for the 39-month project starting from 27th December 2017. (The Star Online)

• Keck Seng (M) Bhd is not expecting any significant impact from the 60-day suspension of its Roundtable on Sustainable Palm Oil (RSPO) certificatedue to inadequacies in providing estate contour maps for RSPO’s auditing purposes. The group has taken immediate action to rectify the matter. (The Edge Daily)

• Panasonic Malaysia Sdn Bhd, a 40.0%- owned associate of Panasonic Manufacturing Malaysia Bhd, is targeting sales growth of 5.0% for FY18, on the back of its “shopfront” strategy.

• This strategy focuses on the promotion of Panasonic’s products to attract customers and will enable the group to target strategies to promote the value of the product via demonstration and promotional activities as well as closing the sales in the shopfront.

• The group remained positive of its progress to achieve its FY17 sales growth target, which was also at 5.0%. (The Edge Daily)  

Source: Mplus Research - 5 Jan 2017