• The FBM KLCI finished 0.3% higher yesterday, fuelled by the positive sentiment on most global stockmarkets, amid expectations of a hike in U.S. interest rates. The majority of the lower liners rallied, with the exception of the FBM ACE (-0.3%), while the broader market was positive with seven out-of-ten sectors closing in the green.

• Market breadth, however, turned negative as losers beat the advancers marginally on a ratio of 479-to-473 stocks. Traded volume improved 11.1% to 3.78 bln shares, due to the sustained buyinginterest on the lower-liners.

• Key-index chart toppers include Hong Leong-related companies like Hong Leong Financial Group (+10.0 sen) and Hong Leong Bank (+6.0 sen), followed by Genting (+13.0 sen), Petronas Gas (+12.0 sen) and Kuala Lumpur Kepong (+8.0 sen). Meanwhile, Iskandar Waterfront City (+31.0 sen), Dutch Lady (+30.0 sen), Sam Engineering & Equipment (+29.0 sen), UMW Holdings (+26.0) and Pos Malaysia (+21.0 sen) led the broader market higher.

• On the other side of the trade, broader markets decliners were TAHPS (-39.0 sen), KESM Industries (-28.0 sen), Lafarge Malaysia (-19.0 sen), Amway (-18.0 sen) and DKSH Holdings (-15.0 sen). The five decliners on the Main Board were BAT (- 10.0 sen), IHH Healthcare (-6.0 sen) Petronas Chemicals (-4.0 sen) Genting Malaysia (-2.0 sen) and Axiata (-1.0 sen).

• Asian stockmarkets rallied on Monday ahead of the U.S. Federal Reserve meeting this week. The Nikkei rose 0.2%, boosted by the telecommunication services (+1.0%) and utilities (+0.8%) sectors. The Hang Seng also jumped 1.1% to 23,829.7 points, while the Shanghai Composite index gained 0.8%, on the back of the positive sentiment spilled over from the U.S. stockmarket last Friday. ASEAN stockmarkets continued to gain momentum, closing mostly in the green.

• U.S. stocks closed mostly unchanged, as investors look to higher interest rates on Wednesday. The Dow lost 0.1%, dragged down by Intel (-2.1%), after the latter announced its decision to buy Israeli driverless technology firm Mobileye. The S&P 500 was flattish, while the Nasdaq ended up by 0.2% - led by gains in Sirius XM (+4.8%) and Nvidia (+2.8%).

• European stockmarkets were mostly positive, despite political uncertainties as U.K. inched closer to its divorce from the European Union following the Brexit bill’s approval by the Parliament. The FTSE rallied 0.3% as miners like Fresnillo (+5.6%) and Antofagasta (+4.9%) advanced. Meanwhile, the CAC and the DAX expanded 0.1% and 0.2% respectively overnight.

The Day Ahead

• The key index continues to take small recovery steps as it punches through the 1,720 level again yesterday with rotational play among the index heavyweights staying prevalent, albeit the choppiness in the broader market was largely expected.

• We expect a similar market trend over the near term as market players await for the Federal Reserve’s interest rate decision later in the week with a hike widely anticipated. However, the market’s medium term direction will be dictated by the hike quantum and the Fed’s stance on further interest rate hikes.

• Therefore, we think the FBM KLCI will continue to trend within the 1,720 and 1,730 levels over the near term amid the continuing rotational interest among the index heavyweights as well as among the lower liners and broader market shares. We also think the sustained market interest will also see market breadth and depth staying encouraging and it will help to prolong the positive market environment. MACRO BRIEF

• Malaysia's industrial output rose 3.5% Y.o.Y in January 2017 from a year ago, underpinned by gains in the manufacturing sector. The Statistics Department said that the Industrial Production Index (IPI) was supported by an increase in manufacturing (+4.6% Y.o.Y), mining (+1.1 Y.o.Y%) and electricity (+1.1% Y.o.Y). However, the mining sector output grew at a slower pace vs. the 4.7% Y.o.Y expansion in December 2016. (The Star Online)

Company Briefs

• UEM Sunrise Bhd’s unit, UEM Sunrise (Canada) Alderbridge Ltd, is selling 4.9 ac. of land in British Columbia, Canada for C$113.0 mln (RM372.6 mln) to South Street Development Group's unit 1107782 BC Ltd.

• The disposal is part of its strategy to focus on the domestic market in Malaysia and to shift its international business focus to Australia. UEM Sunrise said the purchase consideration reflected the prevailing market prices of similar properties in the vicinity. The group has two ongoing projects and a third project currently in the pipeline. (The Star Online)

• Sasbadi Holdings Bhd’s has entered into two publishing agreements with the Malaysian Examination Council (MPM), in which Sasbadi has been granted an exclusive licence by the MPM for the publishing, printing, distributing, marketing and sale of the collection of past-year question papers for the Sijil Tinggi Persekolahan Malaysia (STPM) examination and the collection of pastyear question papers for the Malaysian University English Test (MUET), as well as reports on the STPM examination and MUET examination for the years of 2017, 2018 and 2019.

• The publishing agreements are for a period of three years from 1st January 2017 to 31st December 2019. (The Star Online)

• IOI Properties Bhd is aiming to start construction of an office development with an estimated gross development value (GDV) of at least S$3.50 bln (RM11.00 bln) at its newly acquired site in Central Boulevard, Singapore by the end of 2017. The development of the land will encompass about 1.5 mln sq.ft. of built-up space.

• Back in November 2016, IOI Properties’ wholly-owned subsidiary, Wealthy Link Pte Ltd, had successfully tendered for a 1.1-ha. plot in Central Boulevard for S$2.57 bln from Singapore's Urban Redevelopment Authority. (The Edge Daily)

• Salutica Bhd has obtained the green light from the Securities Commission Malaysia (SCM) to transfer the listing of its shares to the Main Market in less than a year from its listing on the ACE Market in May 2016. The consumer electronics products manufacturer did not specify the time frame to complete the transfer its shares to the Main Market, but in an announcement made in end-September 2016, it had expected to complete it by 1Q2017.

• Salutica submitted the application to the capital market regulator to transfer the listing of its shares to the Main Market in early November 2016. (The Edge Daily)

• Edaran Bhd has bagged a RM20.6 mln data facility development contract from the Inland Revenue Board of Malaysia (IRB). Edaran’s job scope was the supply, development, assembly, testing and maintenance of software, hardware and application for Phase 1 Data Power output. The contract will commence on 15th March 2017 and expires on 30th September 2020. (The Edge Daily)  

Source: Mplus Research - 14 Mar 2017