• The FBM KLCI (-0.2%) gave up all its previous two session’s gains to close at its lowest level since early May 2017 on the back of the sluggish Nikkei Manufacturing PMI data for May which is still contacting at 48.7. The lower liners – the FBM Small Cap (-0.3%) and FBM Fledgling (-0.1%) also underperformed in tandem with the weakness in the local bourse, while the Industrial (+0.1%), Industrial Products (+0.1%) and Finance (+0.3%) sectors outperformed the negative broader market.
• Market breadth remained negative as losers outnumbered gainers on a ratio of 505-to-414 stocks. Trading volumes dwindled by 19.1% to 2.22 bln shares as investors remained on the sidelines amid the negative markets.

• Key losers on the big board include Petronas Dagangan (-38.0 sen), Axiata (- 23.0 sen), Westports (-21.0 sen), Petronas Chemicals (-14.0 sen) and IOI Corporation (-10.0 sen). Notable decliners on the broader market were consumer products stocks like Ajinomoto (-20.0 sen), QL Resources (-19.0 sen) and Carlsberg (-18.0 sen), while Hong Leong Industries and Aeon Credit shed 32.0 sen and 18.0 sen respectively.

• In contrast, Hengyuan Refining (+34.0 sen), Nestle (+30.0 sen), Petron Malaysia (+30.0 sen), Hartalega (+23.0 sen) and Tasek Corporation (+16.0 sen) were among the other biggest advancers on the broader market. Key advancers on the big board include Hong Leong Bank (+18.0 sen), Petronas Gas (+18.0 sen), Genting Malaysia (+12.0 sen) and IHH (+11.0 sen). CIMB (+10.0 sen) closed at its highest level since October 2014.

• Asian stock markets closed mostly higher yesterday as the Nikkei (+1.1%) halted a streak of four consecutive sessions of losses, boosted by the strong capital spending data in 1Q2017 which grew 4.5% Y.o.Y. The Hang Seng Index added 0.6% on positive performance in property stocks, but the Shanghai Composite fell 0.5%. ASEAN stock indices closed mostly positive.

• U.S stockmarkets ended at record high levels as banking stocks rallied. The positive sentiment was also supported by the stronger-than-expected jobs and manufacturing data. The Dow added 0.7% while both the S&P 500 and Nasdaq closed 0.8% higher each.

• European stockmarkets were boosted by the strong Eurozone Markit Manufacturing PMI data for May that rose to 57 - the highest level since April 2011. The FTSE gained 0.3% as investors continue to eye the upcoming election next week. The CAC (+0.7%) snapped a streak of five sessions of decline, while the DAX gained 0.5%.

The Day Ahead

• Although the general market undertone is still on the weak side with few noteworthy leads and after the sustained selling on the lower liners, the trend could be reversed over the near term following the Dow’s new high overnight. Other key global indices are also on a positive run and we believe it could also permeate to stocks on Bursa Malaysia to allow it to end the week on a positive note.

• Still, we think the upsides may be limited amid the still tentative market environment and the lack of fresh leads to provide a sustainable market direction. Therefore, we think the upsides could be limited to the 1,770 level with banking stocks likely to continue seeing rotational interest, riding on the RHB and AMMB merger theme.
• We also think the lower liners and broader market shares could see some renewed interest after their recent selldown, but we also think the interest could be muted as retail players will still on a cautious mode and could adopt quick profit taking strategies.

Company Briefs

• 7-Eleven Malaysia Holdings Bhd has aborted its proposed rights issue, which involves issuing RM61.7 mln rights issue of new warrants to fund its working capital following the lukewarm market response. The issue price of the warrant was previously fixed at 10.0 sen per share. (The Edge Daily)

• Perak Corp Bhd has clarified that the 43.0% variation between its FY16 audited and unaudited financial annual net loss, is mainly due to an impairment loss on the investment of an associate, including the advance amount and interest charged as well as additional tax at a subsidiary in respect of the prior year.

• The unaudited FY16 net loss of RM10.9 mln has expanded to RM15.6 mln after including the aforementioned impairment charge of RM4.9 mln. (The Edge Daily)

• RHB Bank Bhd and AMMB Holdings Bhd have confirmed that they are in the midst of discussing a merger and that they have obtained approval from Bank Negara Malaysia (BNM). Both parties have inked an exclusivity agreement to negotiate and finalise terms and conditions of the proposed merger by 30th Augus, 2017. The banks noted that the transaction will most likely be an allshare merger. (The Star Online)

• XingQuan International Sports Holdings Ltd and China Automobile Parts Holdings Ltd (CAP) risk having the trading of their shares suspended on 8th June 2017 if both party failed to submit their quarterly reports by 7th June 2018. (The Star Online)

• Wah Seong Corp Bhd has become a distributor for one of South Korean Doosan Group’s subsidiaries to distribute construction equipment in Peninsular Malaysia.

• Wah Seong’s indirect subsidiary, WDG Resources Sdn Bhd has signed an agreement with Doosan Infracore Co Ltd as the exclusive distributor of Doosan Infracore’s products, which it will also jointly promote. Wah Seong said the distributorship agreement will remain effective until end-2018. (The Edge Daily)

• Perisai Petroleum Teknologi Bhd has secured the agreement with PPL Shipyard Pte Ltd to defer the delivery of two jack-up rigs, Perisai Pacific 102 and Perisai Pacific 103.

• PPL had agreed to extend the delivery date for both rigs to 31st August this year, in view of the slump in the upstream oil and gas sector.

• Both parties have also agreed to seek and evaluate any options that may arise during the deferment period. (The Edge Daily)

• WCT Holdings Bhd plans to list its property assets in a real estate investment trust (REIT) before year end, The REIT will have about RM1.0 bln in assets.

• The listing of the group's properties under a REIT is part of WCT's degearing exercise, as the group aims to lower its gearing from the 0.9x level as at 31st December 2016. (The Edge Daily)
• Westports Holdings Bhd has slashed its overall container volume forecast for FY17 again, following a decline in throughput in the first five months of this year amid intense competition.

• The group now expects FY17 throughput to slip by a single-digit percentage compared with FY16 — which was a record year for the company with 9.95 mln twenty-foot equivalent units (TEUs), a 10.0% jump from FY15 — after revising its container volume target for the year from a slight growth to flat in April.

• Westports posted a drop of 3.0% in throughput volume at 3.95 mln TEUs for the five-month period ending 31st May 2017, compared with the corresponding period last year. (The Edge Daily)

• New Hoong Fatt Holdings Bhd (NHF) remains sanguine of achieving a double-digit growth in net profit and revenue this year, driven by its overseas businesses. The international contribution is expected to grow to 70.0% of the group's revenue by 2021, from 52.0% currently with the company currently exports to more than 50 countries. (The Star Online)

• AppAsia Bhd is collaborating with Hong Kong-based China Mobile International Ltd to expand its digital video content business in China and other overseas markets.

• Under the Memorandum of Understanding (MoU) signed, China Mobile will leverage on AppAsia Studio's content resources and distribute the content in the form of digital video on Migu and other related content platforms, including but not limited to mobile apps, personal computer and internet protocol television. (The Star Online)
• Mesiniaga Bhd has declare a first interim single tier dividend of five sen per share for its financial year ending 31st December 2017, payable on 6th Septembe, 2017. The dividend is the group's first payout since September 2014. (The Edge Daily)  

Source: Mplus Research - 2 Jun 2017