• The FBM KLCI (+0.8%) extended its gains to close at its highest level since early November 2016, led by buying interest in selective telco and banking heavyweights, whilst the Ringgit strengthened against the Greenback. The lower liners also traded positively, but the Mining sector (-1.7%) underperformed the positive broader market.

• Market breadth stayed positive as gainers thumped losers on a ratio of 2-to-1 stocks. Traded volumes gained 26.7% to 2.51 bln shares as market players search for higher returns.

• More than two-third the key index constituents rose, led by telco and banking heavyweights like Axiata (+14.0 sen), Hong Leong Financial Group (+14.0 sen), Maybank (+11.0 sen) and Maxis (+8.0 sen), while MISC rose 23.0 sen. Amongst the biggest gainers on the broader market were Aeon Credit (+40.0 sen), Far East (+22.0 sen), SAM Engineering (+30.0 sen) and MPI (+23.0 sen). Ikhmas Jaya gained 2.0 sen after bagging a commercial building contract worth RM37.7 mln.

• On the flipside, notable losers on the broader market include Heineken (-20.0 sen), Litrak (-10.0 sen), Goldis (-8.0 sen) and Enra (-7.0 sen). Air Asia (-6.0 sen) fell to a month low after crude oil prices rebounded. Meanwhile, Petronas Dagangan (-2.0 sen) and Hap Seng (-1.0 sen) were the only decliners on the big board.

• Japanese stockmarkets retreated as the Nikkei fell 0.4% yesterday on profit taking in export shares after the Japanese Yen strengthened against the US Dollars. The Shanghai Composite added 0.2%, taking cue from the positive developments on Wall Street, while the Hang Seng Index jumped 1.5% on upbeat Chinese manufacturing data. ASEAN stockmarkets, meanwhile, ended mostly higher.

• Wall Street retreated overnight, but managed to recouped most of their intraday losses after the employment data showed fewer-than-expected jobs were added. The Dow fell 0.2%, while the S&P 500 slipped 0.1%, dragged down by the weakness in financial sector (-1.3%).

• Earlier, European benchmark indices closed on the positive territory after enduring a choppy trading session. The FTSE (+0.1%), CAC (+0.03%) and DAX (+0.0.1%), all closed marginally higher on stronger-than-expected PPI data that rose 0.1% Y.o.Y in November 2016 - beating economists’ estimates of 0.1% Y.o.Y decline.

The Day Ahead

• After successive days of gains, we think the market is ripe for quick profit taking activities to allow the recent gains to be digested. We think the pullback is healthy as it would allow for the market to take a breather and to potentially gear-up for another uptrend over the intermediate term.

• As it is, the FBM KLCI has had a sterling run over the past two week – climbing nearly 2.5% as market participants capitalise on the positive global market undertone to take-up fresh positions in equities ahead of the inauguration of a new President in the U.S.

• Still, we think the profit taking activities will be mild for the time being and the downside risk is likely to be limited to the psychological support of 1,650 points.

• We also expect retail players to lock in their short–term profits on the lower liners and broader market shares ahead of the weekend.

Company Briefs

• Top Glove Corp Bhd is planning to raise the average selling price (ASP) of its rubber gloves in the three months until 28th February 2017, in view of the fluctuation in the prices of raw materials and the strengthening of the US Dollar, which had a negative impact on its production costs.

• The company also said that potential increase in the ASP will depend heavily on how much further the Ringgit would weaken against the Greenback and if raw material prices would go rise further in the coming quarters. (The Edge Daily)

• My EG Services Bhd (MyEG) has clinched a five-year contract worth RM553.9 mln to provide online renewal of temporary employment pass for foreign workers for the Immigration Department. The project will end on 22th May 2020. (The Star Online)

• Engineering firm LFE Corp Bhd will be exiting its Practice Note 17 (PN17) status on 6th January 2017, following the regularisation of its business operations and financial health.

• To recap, LFE Corp slipped into PN17 status on 1st October 2012 after its shareholders' equity for the financial year ended 31st July 2012 was less than 25.0% of its issued capital. (The Edge Daily)

• LBS Bina Group Bhd is aiming to achieve a higher target of RM1.5 bln in sales for 2017, after achieving its RM1.2 bln sales target for 2016. The group has planned launches worth about RM2.3 bln in gross development value for the year and has an unbilled sale of RM1.48 bln as at 28th December, 2016.

• Its 12 planned launches this year comprise 92.0% residential developments, with the remainder being commercial units. The projects are spread out over the Klang Valley, Pahang and Johor. (The Star Online)

• Amway (M) Holdings Bhd foresees the weakening Ringgit against the Greenback to pressure the multilevel company's profit margin as 90.0% of its products are imported, predominantly from the US.

• Despite hedging its currency exposure annually, margin compression from the weak currency is unavoidable. The group increased its product prices by about 9.3% last year,after the last hike in 2013. (The Star Online)

• Perisai Petroleum Teknologi Bhd has received an approval letter dated 28th December 2016 from the Companies Commission of Malaysia (SSM) approving an extension for the company to hold its 2017 annual general meeting (AGM) and to table its audited financial statements for the 18-month period ending 30th June 2017 latest by 29th December 2017.

• The group had announced on 29th November,2016 that it was changing its financial year end from 31st December, 2016 to 30th June 2017. The company’s last held AGM was on 24th June last year. (The Edge Daily)

• Enra Group Bhd‘s indirect wholly-owned subsidiary, Enra Oil & Gas Services Sdn Bhd (EOGS) has inked a 70:30 jointventure (JV) agreement with Australia's Icon Engineering Pty Ltd to establish a JV company, Enra Icon Sdn Bhd, which will provide low-cost solutions to the upstream oil and gas industry within and outside Malaysia.

• O&C Resources Bhd (OCR) will begin discussions with Universiti Sains Islam Malaysia (USIM) to jointly build student accommodation for the latter.

• OCR’s 80.0%-owned subsidiary, Visi Anggun Properties Sdn Bhd (VAPSB) has inked a Memorandum of Understanding (MoU) with USIM to facilitate further discussions of the joint-collaboration for a two-in campus students’ accommodation by way of build-operate-transfer concept for 4,200 students.

• The validity of the MoU will be binding for one year from 5th January 2017, subject to further extension upon the request by both parties. (The Edge Daily)  

Source: Mplus Research - 6 Jan 2017