• The FBM KLCI (+0.3%) finished slightly above the 1,660.0 psychological level, buoyed by buying-support in banking and telco shares. The FBM Ace (+0.4%) and the FBM Small Cap (+0.5%) rallied, while the FBM Fledging flatlined. The broader market meanwhile, finished broadly in the positive territory.

• Market breadth was positive as winners outweigh losers by a ratio of 411-to-366. Meanwhile, traded volumes gained 11.1% to 1.99 bln shares, amid bargain-hunting activities after the recent selldown in Malaysian shares.

• Banking heavyweights like Hong Leong Bank (+14.0 sen) and Maybank (+12.0 sen) gained momentum, on expectations that the central bank will keep its benchmark rate steady at 3.0% on Thursday. Other blue chip advancers include BAT (+36.0 sen), Kuala Lumpur Kepong (+10.0 sen) and Hap Seng Consolidated (+9.0 sen). Broader market constituents like AEON Credit Service (+30.0 sen), Magni-Tech Industries (+28.0 sen), Globetronics Technology (+21.0 sen), Lafarge Malaysia (+18.0 sen) and Padini Holdings (+15.0 sen) advanced.

• Broader market losers were Nestle (- RM1.58), Panasonic Manufacturing Malaysia (-30.0 sen), Sam Engineering & Equipment (-11.0 sen), Apex Healthcare (- 8.0 sen) and Rapid Synergy (-8.0 sen). Underperformers on the FBM KLCI included Petronas-affiliated companies like Petronas Gas (-48.0 sen) and Petronas Dagangan (-30.0 sen), followed by Genting (-9.0 sen), Axiata (-8.0 sen) and Tenaga Malaysia (-2.0 sen).

• Japanese shares was lower on Tuesday, as the Nikkei fell 1.5% alongside the weaker Yen, dragged down by Daiwa House Industry (-3.8%) and Rakuten (- 3.7%). On the contrary, the Shanghai Composite (+0.2%) and the Hang Seng Index (+0.5%) finished higher, while the ASEAN stockmarkets closed mixed.

• Wall Street ended in red overnight, weighed down by financials, transport and other post-election gainers, amid uncertainties surrounding President-elect Donald Trump’s economic policies. The Dow was 0.3% lower – led by losses in JP Morgan Chase & Co (-3.6%) and Pfizer (- 1.4%). The S&P 500 declined 0.3%, as losses in the financials and industrial sectors offset gains in the consumer staples and utilities-related counters, while the Nasdaq finished down by 0.6%.

• U.K. equities tanked after U.K. Prime Minister Theresa May announced her intention of a clean break from the European Union’s single market on Tuesday. The FTSE fell 1.5% to 7,220.4 points, with majority of its sectors splashed in red. The CAC also lost 0.5% and the DAX shed 0.1% to 11,540.0 points.

The Day Ahead

• Although profit taking activities were evident in recent days, quick bargain hunting activities puts some stability in the key index yesterday, bucking the negative sentiment across global stockmarkets. Nevertheless, we think that the cautiousness still remains amid the uncertainty ahead of Donald Trump inauguration.

• On the local front, we think stocks on Bursa Malaysia could see some mild profit taking activities, taking cue from the weakness in Wall Street. On the downside, the 1,650 level will serve as the immediate support level. Gains however, will be capped at the 1,680-1,700 levels as we think that investors could opt for quick profit taking strategies that would limit the upsides.

• In the meantime, we also think that the lower liners could continue to see rotational plays amid the encouraging trading volumes.

Company Briefs

• Ekovest Bhd's subsidiary will undertake the construction of 72.5km of roads in Kuala Lumpur - Lebuhraya DUKE Fasa 2A, which will link with the various expressways. The estimated total project cost of RM6.32 bln (excluding Goods & Services Tax) for the proposed project was expected to be financed via a combination of internally generated funds, borrowings and/or other fund raising exercise. However, the proposed project is subject to further negotiation between the parties and the principle approval is not binding until the relevant agreement between LDF2A and the government is executed.. (The Star Online)

• Toyo Ink Group Bhd, which first set its sights on operating a power plant in Vietnam a decade ago, is moving closer to realising its objective with the signing of a memorandum of agreement (MoA) on 16th January 2017 to lease the project’s site. Toyo Ink had inked n MoA with the Department of Natural Resources and Environment of Hau Giang Province (Hau Giang DONRE) whereby both parties had confirmed their agreement to the terms and conditions of the land lease agreement (LLA). The MoA would be in effect for eight months or until the date of signing of the BOT contract, whichever date is earlier.

• To recap, Toyo Ink plans to develop a US$3.50 bln (RM15.60 bln) coal-fired thermal power plant with a total capacity of 2 x 1,000MW, which forms a part of the Song Hau Power Complex on 360-ha. that is aimed to cater substantially to the power needs of Vietnam’s southern region. The company would strive to reach agreements on all outstanding terms and issues relating to the buildoperate-transfer (BOT) contract and the power purchase agreement by August 2017. (The Star Online)

• Hua Yang Bhd’s 3QFY17 net profit declined 65.5% Y.o.Y to RM10.4 mln, due to slower contribution from property development sales amid the sluggish property development industry. Revenue for the quarter dropped 52.3% Y.o.Y to RM74.0 mln.

• For 9MFY17, cumulative net profit slipped 42.2% Y.o.Y to RM51.3 mln. Revenue for the period fell 32.0% Y.o.Y to RM340.7 mln. A second interim dividend of two sen per share was declared. (The Edge Daily)

• Malayan Banking Bhd (Maybank) saw some 34.1 mln shares, representing 0.3% of its total outstanding shares, disposed of via an off-market trade at RM8.05 apiece. The disposal, which is believed to have been done by the Federal Land Development Authority (Felda), was transacted in 14 tranches via off market deals. The shares that changed hands were valued at RM274.2 mln.

• Felda was looking at selling part of its stake in Maybank at RM8.05 per share, in a move to raise funds to purchase a 37.0% stake in Indonesia's PT Eagle High Plantations Tbk. The transaction at RM8.05 was at a discount of 1.5% to its yesterday’s market price closing of RM8.17. With this disposal, Felda would have seen its equity interest in Maybank drop to 1.6% (from 1.9%). (The Edge Daily)

• S P Setia Bhd has announced that S P Setia (Indonesia), Sime Darby Bhd and I&P Group Sdn Bhd have decided not to pursue the joint venture with Indonesia’s PT Hanson International Tbk to jointly develop an affordable housing project in Greater Jakarta, Indonesia. All three parties are exercising the right to terminate the Memorandum of Understanding (MoU) they had signed with Hanson International in accordance with the terms in the MoU, with immediate effect. No reason was given for the termination.

• To recap, on 2nd August 016, the three Malaysian property developers entered into the MoU with Hanson International to develop 500-ha. piece of land with a gross development value of 11.29 trn rupiah (RM3.50 bln). (The Edge Daily)

• Priceworth International Bhd has fixed the second and final tranche of its placement shares at 10.0 sen per share. The price was at a discount of about 9.7% or 1.1 sen over the five-day volume weighted average price which spanned until 16th January 2017. With 20.2 mln shares to be placed out to investors, Priceworth is expected to raise some RM2.0 mln.

• The proceeds from the private placement would be used to partly fund the acquisition of Rumpun Capaian Sdn Bhd and its 99.9%-subsidiary, which received a 100-year timber extraction and replanting concession on 101,161- ha. of forest reserve in Trus Madi, Sabah. (The Edge Daily)

• Silk Holdings Bhd will be suspended from trading on 18th January, 2017 from 9.00 am to 5.00 pm, pending the release of an announcement relating to a material transaction. (The Edge Daily)  

Source: Mplus Research - 18 Jan 2017