• The FBM KLCI (+0.7%) extended its gains last Friday, buoyed by buying support amongst selective telco heavyweights as the key index pared off most of its weekly losses before closing just 0.1% W.o.W lower. The lower liners – the FBM Small Cap (+0.7%), FBM Fledgling (+0.5%) and FBM ACE (+1.7%) indices, all advanced, while the broader market ended higher.

• Market breadth stayed positive as advancers outpaced decliners by a ratio of 519-to-317 stocks. Traded volumes gained 7.4% to 1.96 bln shares on rotational play amongst the lower liners.

• Leading the advancers list on the big board were PPB Group (+28.0 sen), Hong Leong Bank (+18.0 sen), Genting (+16.0 sen), KLK (+16.0 sen) and Axiata (+15.0 sen). Amongst the biggest gainers on the broader market were Allianz (+32.0 sen), Genting Plantations (+30.0 sen), Fraser & Neave (+24.0 sen) and United UliCorporation (+15.0 sen). Excel Force added 8.0 sen after it plans to partner with a global electronic trading solutions company, Ullink.

• In contrast, Enra Group (-27.0 sen), UMW (-21.0 sen), Oriental Interest (-19.0 sen), Rapid Synergy (-10.0 sen) and United Plantations (-10.0 sen) topped the broader market losers list. There were only three decliners on the FBM KLCI – BAT (-72.0 sen), Petronas Gas (-4.0 sen) and KLCC (-1.0 sen).

• Japanese stockmarkets rebounded after enduring a choppy trading session as the Nikkei added 0.02%, lifted by gains in banking stocks. Both the Shanghai Composite and Hang Seng Index, however, declined 0.6% and 0.2% respectively after the People Bank of China unexpectedly tightens its monetary policy by raising its interest rates by 10 basis points. ASEAN stockmarkets, meanwhile, closed mixed.

• U.S. stockmarkets closed higher last Friday after President Donald Trump signed an executive order to deregulate the financial sector, coupled with stronger-than-expected jobs data. The Dow gained 0.9% to reclaim the 20,000 psychological level, while the S&P 500 rose 0.7%, anchored by gains in the financial sector (+2.0%)

• Earlier, European benchmark indices - the FTSE (+0.7%), CAC (+0.7%) and DAX (+.02%) all advanced, buoyed by the positive economic manufacturing data that saw the Markit Composite PMI rising to 54.4 in January 2017. Notable gainers were banking stocks like Deutsche Bank (+2.9%), Royal Bank of Scotland (+2.7%) and Credit Suisse Group (+1.8%).

The Day Ahead

• We expect Malaysian stocks to continue heading higher over the near term as market sentiments are still looking positive following a spate of global economic data that indicates that the economic recovery is gathering pace, which is also helping to buoy many global stockmarkets.

• The positive trend is likely to see the key index taking another stab at the psychological 1,700 points level over the near term as we think index linked stocks will continue to be chased up, while the lower liners and broader market shares will continue to be the mainstay of retail players as they continue to make a beeline back to the equity market after the Lunar New Year holidays.

• At the same time, we expect market breath to improve as the general risk appetite has risen a notch amid the current positive market environment.

Company Briefs

• Bursa Malaysia Bhd's 4Q2016 net profit was flat at RM50.2 mln against RM50.6 mln last year, although revenue fell 8.7% Y.o.Y to RM123.7 mln, from RM135.6 mln a year ago. The slightly lower earnings was due to weaker performance from its securities market division, albeit somewhat offset by better performance in the derivatives markets division.

• Meanwhile, its 2016 net profit lost 2.5% Y.o.Y to RM193.6 mln, from RM198.6 mln in 2015, in-tandem with the decline in annual revenue of 2.3% Y.o.Y to RM 506.8 mln, from RM518.5 mln in the previous corresponding year. (The Star Online)

• Tiong Nam Logistics Holdings Bhd has been ordered by the Court of Appeals to refund part of the sum it won in a legal suit against Lay Hong Bhd in a dispute over transportation charges in April last year.

• Consequently, Tiong Nam is required to repay RM2.6 mln to Lay Hong, while the group is allowed to retain close to RM1.6 mln of the claim paid for services rendered, as well as RM30,000 out of the RM50,000 cost awarded by the High Court earlier.

• Tiong Nam said that the sum to be refunded has no significant impact on the group’s financial position as it was not recognised in its audited financial statements for FY16. (The Edge Daily)

• Malaysia Airports Holdings Bhd (MAHB) has announced that its operating agreements for the KL International Airport (KLIA), klia2 and other Malaysian airports have been extended for another 35 years.

• This means that the operating agreement for the KLIA, which was originally inked between the Malaysian government and MAHB in February 2009, will be extended for an additional 35 years, from its existing 25 years. (The Star Online)

• Borneo Aqua Harvest Bhd has aborted its joint-venture (JV) contract with City Harvest Aquaculture Sdn Bhd after the latter failed to deliver documents relating to its business activities. Additionally, the shareholders of City Harvest were also reported to have an unresolved dispute that disrupted the group's operations.

• To recap, Borneo Aqua had inked a JV agreement with City Harvest in January 2014 to enable the latter to utilise a few parcels of land for oyster aquaculture farming. With the termination, Borneo Aqua will seize all assets belonging to City Harvest that are situated on the land as agreed in the contract. (The Star Online)

• Axiata Group Bhd's Board of Directors has extended Tan Sri Jamaludin Ibrahim's contract as Managing Director, President and Group Chief Executive Officer (CEO) for an additional three years from March 2017.

• Tan Sri Jamaludin is expected to continue leading the turnaround of Celcom Axiata Bhd in Malaysia, the execution of PT XL Axiata Tbk's new strategy in Indonesia, and the merger of Robi and Airtel in Bangladesh, while at the same time capitalising on successes at most operating companies including edotco Group Sdn Bhd and Axiata Digital Services Sdn Bhd ventures. (The Edge Daily)

• Practice Note 17(PN17) company Kuantan Flour Mills Bhd’s (KFM) external auditor, McMillan Woods Thomas has issued a qualified audit opinion for the group’s FY16 financial statements – due to the uncertainties on the group’s going concern status.

• Todate, the group has yet to finalise any regularisation plan since the announcement made on 28th December, 2015 on its status as an affected issuer under the PN17 listing. (The Edge Daily)  

Source: Mplus Research - 6 Feb 2017