• Following the firmer Ringgit against the U.S. Dollar, coupled with the higher crude oil prices, the FBM KLCI (+0.9%) extended its winning streak for a third day last Friday and subsequently rose 2.1% W.o.W to record its best weekly performance since January 2016. The lower liners also close mostly higher as the FBM Small Cap and FBM Fledgling rose 0.1% and 0.3% respectively, while the broader market ended mostly in the green.

• Market breadth remained positive as gainers edged losers on a ratio of 442-to- 403 stocks. Traded volumes, however, slipped 21.8% to 1.97 bln shares.

• Notable advancers on the big board were BAT (+30.0 sen), Axiata (+28.0 sen), Telekom (+20.0 sen), Public Bank (+14.0 sen) and RHB Bank (+13.0 sen). Meanwhile, Panasonic (+64.0 sen), United Plantations (+42.0 sen), KESM industries (+33.0 sen) and SAM Engineering (+26.0 sen) were amongst the biggest gainers on the broader market. LFE Corporation jumped 3.5 sen after exiting the PN17 status.

• In contrast, Dutch Lady (-38.0 sen), Hong Leong Industries (-13.0 sen), BLD Plantations (-10.0 sen) and Fraser & Neave (-10.0 sen) topped broader market losers list. Asia Knight tanked 5.5 sen to close at its lowest level in 10 years. There were only three decliners on the FBM KLCI – MISC (-6.0 sen), Westports (-5.0 sen) and KLCC (-2.0 sen).

• Asia benchmark indices, however, ended mostly lower as the Nikkei (-0.3%) extended its losses, dragged down by exporters like Nissan (-2.2%), Honda (- 1.9%) and Mitsubishi (-2.6%) and was hurt by the stronger Japanese Yen against the Greenback. The Shanghai Composite (-0.4%) snapped a streak of four consecutive days of gains, but the Hang Seng Index added 0.2% on the rally in technology stocks. ASEAN stockmarkets, meanwhile, ended mostly higher.

• U.S. stockmarkets advanced last Friday as the Dow gained 0.3%, fuelled by gains in technology stocks. On the broader market, the S&P 500 and Nasdaq rose 0.4% and 0.6% respectively to close a their fresh all-time high levels.

• Despite opening lower at the start of the trading bell, key European benchmark indices ended in a positive note. The FTSE (+0.2%), CAC (+0.2%) and DAX (+0.1%), all extended their gains as the former recorded its ninth consecutive winning day. Notable gainers were banking stocks like Llyods Banking Group (+1.9%), HSBC Holdings (+1.1%) and Deutsche Bank (+0.1%).

The Day Ahead

• While we thought quick profit taking activities could materialise last Friday after the FBM KLCI’s strong recent gains, the tide remained firm and the uptrend extended instead. This is leaving a still positive undertone and the market looks to extend its uptrend with the buying interest still dominating for now.

• Nevertheless, we think the key index is approaching its near term overbought and a pullback could be due soon. Therefore, we think the 1,680 level may become a significant hurdle for the FBM KLCI to clear over the near term and we continue to think that a profit taking spell will be healthy for the recent gains to be digested before making a fresh stab at the 1,700 points level. On the downside, we think the 1,650 level will provide firm support for now.

• Meanwhile, we also think that the lower liners and broader market shares will continue to see renewed following, but we think market conditions may turn increasingly mixed as market players start to lock in their near term profits.

Company Briefs

• Tenaga Nasional Bhd is planning to buy a 50.0% stake in Vortex Solar S.a.r.l. for £86.0 mln (or RM477.0 mln) in a bid to enter the U.K. electricity generation sector. The group has inked the subscription and funding agreement with Beaufort Investment S.a.r.l. to acquire the new Vortex Solar shares.

• Beaufort is the owner of Vortex Solar which has stakes in TerraForm UK 2 Intermediate Holdings Ltd and TerraForm UK 3 Intermediate Holdings Ltd, both of whom own and operate solar photovoltaic (PV) assets in the U.K. with a combined net installed capacity of about 365MW.

• Further, Tenaga has also signed a shareholders’ agreement with Beaufort and Vortex Solar to regulate the relationship with one another in relation to Vortex Solar. The transaction is expected to be completed by the 3Q2017. (The Star Online)

• Ekovest Bhd and its joint-venture (JV) partner, Samling Resources Sdn Bhd, have secured a RM2.11 bln contract for package WPC-02 of Phase 1 works of the Pan Borneo Highway in Sarawak. The 70:30 JV company, Samling-Ekovest JV Sdn Bhd was incorporated as the vehicle for the parties to implement the project.

• Samling Resources will sub-contract the project on a back-to-back basis to Samling-Ekovest at the same price at which the project was awarded to Samling Resources. (The Star Online)

• Sime Darby Bhd has proposed to sell a 50.0% equity stake in Weifang Sime Darby West Port Co Ltd (WSDWP) in China to Shandong Chenming Paper Holdings Ltd (SCPHL) for RMB38.6 mln (or RM24.9 mln).

• Following the disposal, Sime Darby and SCPHL has also signed a joint-venture to manage the port. Moving forward, the group is sanguine that the partnership will secure significant baseload woodchip volume for WSDWP's multipurpose terminal at the Weifang Port in the Shandong province, as well as potentially attract other forestry products to Weifang Port.

• The proposed joint-venture (JV) is slated to be completed in the 1H2017, with proceeds from the new tie-up expected to be used as working capital or the funding of other logistics projects. (The Star Online)

• Green Packet Bhd has acquired an 80.0% equity stake in e-payment firm, WebOnline Dot Com Sdn Bhd for RM9.0 mln via a share subscription and share acquisition agreement. The 80.0% shareholding in Green Packet consists of 1.15 mln existing WebOnline shares at RM5.22 per share and 450,000 new WebOnline shares at RM6.66 per share. The acquisition was financed via internal funds. (The Edge Daily)

• Perisai Petroleum Teknologi Bhd has announced that Lembaga Tabung Haji is no longer its major shareholder after the latter disposed of 8.8 mln shares and 10.3 mln shares on 28th December 2016 and 30th December 2016 respectively. (The Edge Daily)

• Federal Land Development Authority (Felda) Chairman, Tan Sri Mohd Isa Abdul Samad will be replaced by former Domestic, Trade and Consumer Affairs Minister Tan Sri Shahrir Abdul Samad, although Tan Sri Mohd Isa will remain as the chairman of Felda Global Ventures Holdings Bhd (FGV).

• Prime Minister Datuk Seri Najib Razak said that under the restructuring, there is a division of responsibility towards settlers’ welfare and socio-economic status and Felda’s business. (The Edge Daily)  

Source: Mplus Research - 9 Jan 2017