• The FBM KLCI ended down 0.4% to 1748.3 points yesterday – due to the negative sentiment spilled over from global and regional stockmarkets. The FBM Small Cap (-0.3%), the FBM Fledgling (-0.4%) and the FBM Ace (- 0.5%) were also splashed in red, while only the construction (+0.1%), technology (+0.9%) and plantations (+0.4%) sectors bucked the general negative trend to close positively.

• Market breadth was depressed as losers beat winners on a ratio of 605-to-328 stocks. Traded volumes thinned by 30.9% to 3.16 bln shares as investors stayed on the sidelines, waiting for fresh trading catalysts.

• Decliners on the blue-chip gauge include Genting Malaysia (-18.0 sen), PPB Group (-16.0 sen) Hong Leong Financial Group (- 14.0 sen), Public Bank (-12.0 sen) and Petronas Chemicals (-10.0 sen). Meanwhile, broader market underperformers were Nestle (-RM2.40), Scientex (-22.0 sen), Dutch Lady (-18.0 sen), United Plantations (-18.0 sen) and Aeon Credit Service (-10.0 sen).

• Panasonic Manufacturing (+RM1.00), Malaysian Pacific Industries (+34.0 sen), Fraser & Neave (+20.0 sen), Far East Holdings (+20.0 sen) and United Malacca (+20.0 sen) led the broader market higher. Significant Main Board advancers on Wednesday include RHB Bank (+9.0 sen), IOI Corporation (+7.0 sen), Maxis (+5.0 sen), Hap Seng Consolidated (+4.0 sen) and IJM (+4.0 sen).

• Japanese equities tumbled yesterday – dragged down by a stronger Yen and rising geopolitical tensions between Japan and North Korea. The Nikkei tanked 2.1%, weighed down by losses in the financials (-3.5%) and materials (- 2.7%) sectors. Meanwhile, the Shanghai Composite index (-0.5%) and the Hang Seng (-1.1%) retreated ahead of the corporate earnings releases by banking giants. ASEAN stockmarkets was also splashed in the red yesterday.

• Wall Street eked-out gains as investors wait to see if President Donald Trump could seal the deal on his new healthcare bill. The Dow (-0.03%) recouped its earlier losses, albeit still closing marginally in red for the fifth consecutive session. Meanwhile, the S&P 500 (+0.2%) and the Nasdaq (+0.5%) gained on bargainhunting activities in technology-related stocks.

• European stockmarkets took a dip amid a string of corporate profit warnings and a fresh terror attack in Britain. The FTSE declined 0.7%, pulled down by Kingfisher (-5.1%) after the latter warned that the challenging political backdrop in Europe could potentially disrupt sales growth. The CAC and the DAX, meanwhile, weakened by 0.2% and 0.5% respectively after a volatile intraday session.

The Day Ahead

• Although the general market sentiments remain firm, we think the consolidation spell has yet to end and should linger over the near term. As it is, global markets have also yet to find a firmer support and the continuing downside bias will also extend to stocks on Bursa Malaysia.

• We view the continuing consolidation as healthy as it would allow the recent gains to be absorbed and the market to take a breather. This would also allow the market to recharge for further upsides over the intermediate term. On the downside, the 1,740 level remains the key support for now, while the 1,750 level is the immediate resistance, followed by the 1,770 level.

• Similar conditions are also expected to permeate to the lower liners and broader market shares as profit taking activities are still unfolding.

Company Briefs

• Anzo Holdings Bhd’s unit, Harvest Court Construction Sdn Bhd, has received a letter of intent for a RM109.3 mln contract to undertake Phase 2 of the Porto De Melaka Hotel and Resort development. The contract involves the turnkey design and construction of a 216- room hotel complete with interior fit-out and furnishings and associated infrastructure works.

• Porto de Melaka project is sited on 9.9 a.c land located near the buffer zone of the Unesco’s World Heritage site. It is a mixed development project consisting of 382 units of villa apartment, a retail lifestyle mall and a five-star hotel. (The Star Online)

• Petronas Carigali Sdn Bhd has awarded Uzma Bhd’s subsidiary, Uzma Engineering Sdn Bhd (UESB), a contract for the provision of fishing equipment and services. The contract would run for duration of two years starting from February 2017 to February 2019, with an extension option of a year for fishing services across Petronas Carigali’s area of operations. (Bernama)

• Metronic Global Bhd has terminated its joint venture (JV) with Northern Paradise Sdn Bhd to build a mixed development project with a gross development value of RM80.0 mln after their agreement lapsed. The JV agreement, dated 15th November 2013, lapsed after the parties failed to procure the approvals and consents from the authorities within the period provided for in the agreement. The slowdown in the property market was also cited as a factor. (The Edge Daily)

• Halex Holdings Bhd has received a conditional mandatory general offer from Waras Dinamik Sdn Bhd and Datuk Ong Soon Ho to acquire all the remaining ordinary shares in Halex not held by them at 64 sen per share in cash.

• The offer price is 4.5% below 22nd March 2017’s share price closing of 67 sen. The MGO came after Waras Dinamik acquired an additional 26.1 mln Halex shares or a 24.6% stake through direct business transactions at the price between 60 sen and 62 sen 22nd March 2017, which increased Waras Dinamik’s shareholding in Halex to 39.2%. (The Edge Daily)

• Poh Huat Resources Holdings Bhd’s 1QFY17 net profit climbed 25.0% Y.o.Y to RM17.7 mln on higher turnover, a one-off gain from the disposal of an investment of RM435,000 and a recognised foreign exchange (forex) gain of approximately RM93,000. Revenue for the quarter added 8.2% Y.o.Y to RM163.5 mln. A dividend of two sen per share was declared. (The Edge Daily)

• Leon Fuat Bhd has been offered a total of RM45.8 mln by the government as compensation for the compulsory acquisition of the plots of land it owns in Sungai Besi, Kuala Lumpur. (The Edge Daily)

• Berjaya Land Bhd’s (BLand) 3QFY17 net profit stood at RM33.8 mln vs. a net loss of RM21.0 mln in the previous corresponding quarter, on the back of higher share of profit from its associate companies, especially Berjaya Kyoto Development (S) Ltd from the sale of residences, coupled with lower finance costs. Revenue for the quarter climbed 3.8% Y.o.Y to RM1.53 bln.

• For 9MFY17, cumulative net profit declined 5.2% Y.o.Y to RM187.0 mln. Revenue for the period, however, grew 2.6% Y.o.Y to RM4.70 bln. (The Edge Daily)

• Luster Industries Bhd is planning to undertake a private placement of new shares, representing up to a 10.0% stake in the company to raise as much as RM27.1 mln to fund its property development expenditure and working capital. Luster intends to place the shares to independent third-party investors to be identified later. (The Edge Daily)

• Geely Automobile Holdings’ president, An Conghui, has confirmed that Geely has withdrawn its bid to buy a controlling stake in Malaysian carmaker Proton Holdings Bhd, which is DRBHicom Bhd's wholly-owned automotive unit.

• Geely did not elaborate on the reasons for the decision to withdraw the bid, but Li Shufu, its Chairman, had earlier reportedly said that Proton kept changing its mind on the direction of the automaker. (The Edge Daily  

Source: Mplus Research - 23 Mar 2017