• Despite strong Industrial Production data which grew at the fastest pace since March 2015, the FBM KLCI (+0.2%) traded in a tight range yesterday as gains were limited by the selling pressure in selective telco heavyweights. The lower liners – the FBM Small Cap (+0.2%), FBM Fledgling (+0.5%) and FBM ACE (+2.5%), all rose, while the broader market closed mixed.

• Market breadth remained positive as gainers outpaced losers on a ratio of 467- to-324 stocks. Traded volumes added 2.7% to 2.76 bln shares as trading interest were skewed towards the lower liners.

• BAT (+3.0 sen) topped the key index advancers list, followed by Tenaga (+20.0 sen), Genting (+9.0 sen), Hong Leong Bank (+6.0 sen) and Sime Darby (+5.0 sen) as they were among the biggest advancers. Notable gainers on the broader market include SAM (+37.0 sen), Time dotCom (+29.0 sen), Metrod (+15.0 sen) and Lafarge (+14.0 sen). Air Asia added 19.0 sen after there was a 5.7% Y.o.Y growth in airport passenger movement in 2016.

• In contrast, Nestle (-48.0 sen), Heineken (-12.0 sen), Allianz (-10.0 sen), LPI Capital (-10.0 sen) and Tasek Corporation (-10.0 sen) topped the broader market losers list. On the big board, Petronas Gas (-32.0 sen), Hap Seng (-11.0 sen), PPB Group (-8.0 sen), Maxis (-6.0 sen) and Hong Leong Financial Group (-6.0 sen) were amongst the biggest decliners.

• Japanese stockmarkets rebounded from a streak of three days of decline as the Nikkei rose 0.3%, boosted by the weaker Japanese Yen against the Greenback. The Hang Seng Index jumped 0.8%, spurred by basic materials stocks after China is reported to be stepping up its commodity supply cut, but the Shanghai Composite slipped 0.8% on weaker-than- expected inflation data. ASEAN stockmarkets, meanwhile, ended mixed.

• Wall Street rebounded overnight as the Dow (+0.5%) recouped all its previous session’s losses, owing to the sharp recovery in crude oil prices. On the broader market, the S&P 500 gained 0.3%, while the Nasdaq (+0.2%) advanced for the sixth straight session.

• Earlier, European benchmark indices also edged higher – the FTSE (+0.2%), CAC (+0.01%) and DAX (+0.5%) all rose as investors digested comments from President-elect Donald Trump's first press conference since he was elected in early November 2016. Notable advancers include oil & gas companies like Royal Dutch Shell PLC (+1.2%), Total SA (+1.2%) and Statoil ASA (+0.6%).

The Day Ahead

• We continue to think that the overall market conditions remain firm amid the ongoing purple patch on Bursa Malaysia equities. As it is, market participants are making a strong bee-line back into local stocks and this is helping market breadth to jump to its highest levels in five months – a clear sign that market interest has returned.

• Hence, we expect the FBM KLCI to continue its near term ascend and to target the 1,680 level amid the sustained market positivity. The generally positive overseas stockmarkets will also aid the local stocks to move higher as market sentiments remains on a high.

• Much of the interest is likely to remain among the lower liners and broader market shares as more retail participants re-enter the market. At the same time, we also see increased rotational plays and switching among the above stocks. MACRO BRIEF

• Malaysia’s Index of Industrial Production (IPI) grew 6.2% Y.o.Y in November 2016, supported by better performance across all sectors. The Department of Statistics Malaysia reported a growth of the IPI in manufacturing (+6.5% Y.o.Y), mining (+4.7% Y.o.Y) and electricity (+9.7% Y.o.Y) sectors.

• However, Malaysia’s IPI saw a 2.9% M.o.M decline, dragged down by the negative growth in the manufacturing (-4.0% M.o.M) and electricity sectors (-3.5% M.o.M), while there was a slow growth in the mining sector (+0.9% M.o.M). From January to November, IPI expanded 3.7% Y.o.Y. (The Edge Daily)

Company Briefs

• SapuraKencana Petroleum Bhd and global technology services firm, Proserv are planning to jointly-provide enhanced technology services offerings to clients in Asia Pacific.

• Services provided include subsea production and subsea maintenance services to the drilling, production, maintenance and decommissioning market sectors - supported by Proserv's suite of advanced subsea production equipment and controls and Sapura Kencana’s technical support, resources and assets.

• The partnership will enable the group to strengthen and diversify of its range of services to clients, especially in operations and maintenance services as well as assist clients in improving efficiency and asset obsolescence management. (The Edge Daily)

• The Employees Provident Fund (EPF) was reported to have disposed of some 3.5 mln shares in Bumi Armada Bhd. Accordingly, EPF now holds about 334.4 mln shares in the latter. (The Edge Daily)

• Gadang Holdings Bhd has entered into a joint-venture (JV) agreement with Perikatan Progresif Sdn Bhd to jointly develop a townhouse project with a gross development value (GDV) of RM160.0 mln in Taman Putra Perdana, Puchong.

• The proposed development will be situated on a 17.5-ac. piece of leasehold land and is expected to be completed within 42 months from the date the building plans approval is obtained.

• As of October last year, Gadang's construction order book stood at RM603.7 mln and the group has been actively tendering for government infrastructure and building projects worth RM5.2 bln in total. (The Star Online)

• HeveaBoard Bhd is planning to acquire a piece of leasehold vacant land in Seremban for RM13.5 mln to expand its production capacities to meet demand. The vacant land is located next to its existing manufacturing plants.

• The proposed acquisition will be financed via internally generated funds (33.0%) and bank borrowing (67.0%). (The Edge Daily)

• Paramount Corp Bhd is buying a 66.0% equity stake in a K-12 education group, REAL Education Group for RM183.0 mln in cash, as part of its strategy to be amongst the largest full-spectrum education services providers in Malaysia. The K-12 education segment consists of kindergarten, primary and secondary education.

• The group has inked an agreement with Character First Sdn Bhd for the acquisition and will fund the purchase through internally-generated funds and bank borrowings. (The Star Online)

• Sunway Real Estate Investment Trust has inked a conditional sale and purchase agreement with Champion Edge Sdn Bhd for the purchase of a 63.6-sq.m. plot of land in Bandar Shah Alam for a cash consideration of RM91.5 mln.

• The property is under an existing lease of 18 years which will expire on 31st December, 2034 and the agreement will be completed upon obtaining the building plan approvals from the relevant authorities.

• The acquisition will be funded through the group's existing debt programme. (The Star Online)  

Source: Mplus Research - 12 Jan 2017