• The FBM KLCI (+0.01%) flatlined on Friday’s closing bell ahead of U.S. employment data and was also affected by the weaker crude oil prices. On a weekly basis, however, the FBM KLCI rose 0.5% W.o.W to close slightly above the 1717.0 psychological levels. The lower liners finished on an upbeat note –led by the FBM Small Cap (+0.9%), despite a mixed broader market.

• Market breadth was positive as advancers outrun the losers on a ratio of 471-to-435 stocks. Traded volume also increased by 1.4% to 3.4 bln shares on the back of buying support from foreign investors.

• Main Board constituents - BAT (+74.0 sen), Axiata (+8.0 sen) and Hap Seng Consolidated (+4.0 sen) rallied, alongside banking giants like Hong Leong Financial Group (+6.0 sen) and Maybank (+4.0 sen). Advancers on the broader market were KESM Industries (+78.0 sen), Dutch Lady (+64.0 sen), Iskandar Waterfront City (+52.0 sen), Knusford (+23.0) and PLS Plantations (+20.0 sen).

• Broader markets loser, meanwhile, were Apex Healthcare (-18.0 sen), Petron Malaysia Refining & Marketing (-15.0 sen), Amway (-10.0 sen), Atlan Holdings (- 10.0 sen) and IQ Group (-10.0 sen), Underperforming key heavyweights include Westports Holdings (-11.0 sen), Genting Malaysia (-8.0 sen) Petronas Gas (-8.0 sen) AMMB Holdings (-6.0 sen) and Misc Bhd (-5.0 sen).

• Key regional benchmark indices closed mostly up – led by Japanese stocks as the Nikkei jumped 1.5% to 19,604.6 points, on the back of gains in exportoriented stocks with a weaker Yen. The Hang Seng also rose 0.3%, buoyed by gains in the consumer discretionary (+1.7%) and real estate (+1.2%) stocks. The Shanghai Composite index, however bucked the general sentiment to end 0.1% lower, dragged down by weakness in Zhejiang Jasan (-10.0%) and Hangzhou Nbond Nonwovens (-9.3%). ASEAN stockmarkets closed mostly in the green on Friday.

• Wall Street pared earlier losses to close in the positive territory as stronger-thanexpected employment data paved the way for an interest rate hike in March. The Dow (+0.2%) ended in green after a choppy trade, on the back of gains in General Electric (+2.1%) and United Health Group (+1.2%). The S&P 500 expanded 0.3%, as eight of its eleven sectors rallied, while the Nasdaq finished 0.4% higher.

• The majority of European equities climbed on Friday, as investors digested fresh global economic data. The FTSE rose 0.4% as energy stocks like BP (+3.7%) and Paddy Power Betfair (+2.3%) gained traction. Meanwhile, the CAC was up by 0.2%, but the DAX declined by 0.1%, due to disappointing trade data from Germany.

The Day Ahead

• We continue to think that the key index will veer within a rangebound trend within the 1,710-1,730 levels over the near term as market players await for a decision on the U.S. interest rate hike later this week. In the interim, there are few noteworthy domestic leads to excite market players, but we expect the strong rotational interest to persist amid the calmer market conditions and consequently a mild uptrend is expected.

• This is likely to see market breadth staying positive – a sign that the underlying market interest remains strong and this could provide the impetus for the market to climb higher over the immediate term, albeit the bouts of choppiness will still prevail.

• We also see the interest among the lower liners and broader market shares to remain firm as retail players continue to switch to laggards.

Company Briefs

• Sime Darby Bhd has aborted its plan to create a real estate investment trust (REIT) platform through the reverse takeover of Singapore-listed Saizen REIT. This plan was scuttled as it was not possible to complete the proposals by the long-stop date of the implementation agreement, which is 31st March 2017.

• Back in August 2016, Sime Darby signed a framework agreement with Japan Residential Assets Manager Ltd (JRAM), the Saizen REIT manager, to sell industrial properties in Australia to Saizen REIT and leasing them back. The properties are held by Sime Darby’s indirect unit, Hastings Deering (Australia) Ltd.

• Sime Darby Property Singapore Ltd (SDPSL), another indirect unit of Sime Darby had also entered into a conditional share purchase agreement to acquire an 80.0% stake in Saizen REIT at the issue price of S$0.03604 per new unit and issue promissory notes, which would be satisfied in cash, as consideration for the new units. SDPSL will pay A$282.6 mln (RM947.7 mln) via the promissory notes and cash proceeds received from placing out new Saizen REIT units,and A$73.2 mln (RM245.6 mln) in cash from external bank financing. (The Star Online)

• China-based Triumpher Steel Construction Group Ltd had initiated the arbitration process against a unit of WCT Holdings Bhd for works relating to the terminated Nad Al Sheba Dubai Racecourse project in Dubail

• The unit, WCT Bhd (Dubai Branch) and its joint-venture (JV) partner, Arabtec Construction LLC (ATC) face a 107.7 mln Emirati dirham (RM130.6 mln) claim filed by steel construction contractor.

• Triumpher Steel was a subcontractor undertaking certain steel-related works for the racecourse project, in which the 50:50 JV between ATC and WCT was the main contractor. Triumpher Steel’s subcontract was terminated back in 2009. (The Star Online)

• Mass Rapid Transit Corp Sdn Bhd has awarded work packages worth a total of RM2.74 bln to four companies for the MRT2 construction. Gadang Engineering, a unit of Gadang Holdings Bhd, bagged the highest value contract package worth RM952.1 mln for the construction of a viaduct guideway and other associated works from Serdang Raya to Universiti Putra Malaysia.

• Trans Resources, a unit of TRC Synergy Bhd meanwhile, has been given the responsibility of constructing a viaduct guideway and other associated works from Kampung Muhibbah to Serdang Raya worth RM858.2 mln. Acre Works received the third work package worth RM716.0 mln, in which it is expected to complete a viaduct guideway and other associated works from Persiaran Alpinia to Persiaran APEC.

• Sunway Construction Group Bhd was awarded a RM212.3 mln job to build elevated stations and other associated works at Damansara Damai, Sri Damansara West and Sri Damansara East. (The Edge Daily)

• Ta Ann Holdings Bhd has revised the purchase price of its acquisition of Agrogreen Ventures Sdn Bhd to RM209.6 mln from RM211.1 mln, as certain adjustments were made for items arising from the due diligence report for unrecorded liabilities.

• In October 2016, the company had signed conditional agreements with several vendors to acquire Agrogreen’s entire stake, in order to expand its landbank in Sarawak. (The Edge Daily)

• UMW Oil & Gas Corp Bhd’s indirect wholly-owned subsidiary, UMW Offshore Drilling Sdn Bhd has been awarded a contract for an undisclosed value for the provision of a jack-up drilling rig by Vestigo Petroleum Sdn Bhd.

• Vestigo, which is wholly owned by Petronas Carigali Sdn Bhd, is principally involved in the development and production of marginal fields in Malaysia. The contract is to drill one firm well and it commences at the end of March 2017. (The Edge Daily)

• SC Estate Builder Bhd has announced a capital reduction exercise and rights issue with warrants, as well as plan to diversify its principal activities. SC Estate said the proposed par value reduction involves the cancellation of four sen of par value for every five sen share and is aimed at writing off its accumulated losses of RM21.7 mln as at 31st October 2016.

• The rights issue of up to 6.39 bln shares will be on the basis of five rights sharesfor-every one share held, together with up to 2.55 bln warrants on the basis of two warrants-for-every five rights share following the completion of the par value reduction.

• Based on the indicative issue price of one sen per rights share, RM63.9 mln will be raised and it will be used for working capital, business acquisition and investment.Moving forward, SC Estate intends to diversify its business to include construction and its related business such as property development, civil engineering and special trade work. (The Edge Daily) ? Malaysia Airports Holdings Bhd (MAHB) handled 5.0% more passengers in February 2017, with 7.3 mln passengers passing through the 39 airports in the country it manages, compared with 6.9 mln in February 2016. This is despite having only 28 days in February 2017 and the Chinese New Year holidays falling in late January. (The Edge Daily)  

Source: Mplus Research - 13 Mar 2017