• Despite the upward revision of Malaysia’s GDP by World Bank, the FBM KLCI (-0.3%) halted a streak of three consecutive sessions of gains, falling from its twoyear high level after trading mostly in the negative territory yesterday. The lower liners – the FBM Small Cap, FBM Fledgling and FBM ACE, however, rose 0.1% each, while only the Consumer Products (+0.2%) and Plantations (+0.1%) outperformed the negative broader market.

• Market breadth stayed negative as decliners outstripped advancers on a ratio of 459-to-395 stocks. Trading, however, volumes added 2.4% with 2.36 bln shares exchanging hands.

• On the key index, Petronas Gas (-16.0 sen), Genting Malaysia (-16.0 sen), Petronas Dagangan (-14.0 sen), Public Bank (-14.0 sen), and Genting (-14.0 sen) were the major decliners. Meanwhile, broader market losers include Bursa Malaysia (-24.0 sen), Panasonic (-18.0 sen), Ajinomoto (-16.0 sen), Aeon (-11.0 sen) and Quality Concrete (-9.0 sen).

• Consumer products stocks like Nestle (+86.0 sen), New Hoong Fatt (+32.0 sen) and Magni-Tech Industries (+16.0 sen) rose, while other notable gainers on the broader market include Hartalega and Rapid Synergy that added 15.0 sen each. Amongst the biggest advancers on the FBM KLCI were BAT (+40.0 sen), Hong Leong Bank (+12.0 sen), Telekom (+3.0 sen), Axiata (+2.0 sen) and KLK (+2.0 sen).

• Asia benchmark indices ended mixed yesterday as the Nikkei gained 0.02% after trading in a lacklustre manner. The Shanghai Composite surged 1.2% on potential inclusion of China’s A shares into the Morgan Stanley Composite Index (MSCI), but the Hang Seng Index fell 0.1% after reversing all its intraday gains. ASEAN stock indices ended mostly lower.

• Wall Street rebounded overnight as the Dow gained 0.2% despite the political instability ahead of the testimony from former FBI Director on alleged Russian interference in the 2016 U.S. presidential election. The S&P 500 gained 0.2% with eight of the 11 main sectors advancing, while the Nasdaq finished 0.4% higher.

• Earlier, European benchmark indices reversed all their intraday gains to extend their losses ahead of the European Central Bank’s interest rate decision. The FTSE slipped 0.6% ahead of its general election, while the DAX edged 0.1% lower after manufacturing orders fell 2.1% Y.o.Y in April. The CAC closed 0.1% lower.

The Day Ahead

• Although the key index retreated as expected yesterday, valuations remain on the rich side as earnings growth is still largely tepid on most stocks. Thus, we continue to think that the upsides may be difficult to sustain for the time being and further consolidation is still on the cards. At the same, we also think that market players are still scouring for fresh buying impetus, which remains few given that most stocks prices have already reflected their fundamentals.

• Hence, we think the near term consolidation spell is likely to continue with the 1,780 level providing support for now, while the recent high of 1,795 is the immediate resistance before the 1,800 level comes into play.

• With fewer compelling buys, we also see traded volumes remaining at a moderate level as retail participants will continue to tread with caution and selective in their buying decisions. .

COMPANY BRIEFS

• Selangor Dredging Bhd (SDB) has acquired a parcel of prime land in Draycott Park, Singapore for S$72.0 mln (RM223.2 mln) through its indirect 50.0%-associated company, Champsworth Development Pte Ltd.

• The purchase will be 30.0% funded by internal funds and 70.0% from bank borrowings. The acquisition will bring SDB’s total number of properties in Singapore to seven. Moving forward, it plans to build exclusive mid-rise apartments on the site. (The Star Online)

• Yinson Holdings Bhd has increased its investment in Regulus Offshore Sdn Bhd – a company involved in the leasing of chartered vehicles and the provision of ship and crew management services, to 70.0% (from 49.0%) after buying a 21.0% equity stake in Regulus from Mat Sin Bidin for a total cash consideration of RM469,461 on 6th June 2017. (The Edge Daily)

• Anzo Holdings Bhd is working together with Key Alliance Group Bhd for the development of an e-commerce fulfilment hub. The hub will form part of a RM420.0 mln car showroom centre and office towers project in Petaling Jaya, which will be developed by a joint-venture (JV) between Anzo and Captivate Max Sdn Bhd. (The Edge Daily)

• CAB Cakaran Corp Bhd has signed a Memorandum of Understanding (MoU) with Panasonic Eco Solutions Malaysia Sdn Bhd to set up a special purpose company to look into the establishment of a solar farm in Kedah.

• The former will control the company and provide funds to conduct the feasibility studies for the joint solar farm project known as Econation 2 project. Meanwhile, Panasonic will act as the main contractor for the project and will provide consulting and engineering services as well as secure funding from Japanese investors. (The Edge Daily)

• Sumatec Resources Bhd is planning to undertake a private placement of up to 10.0% of its issued shares to raise gross proceeds of up to RM20.5 mln from independent third party investors to be identified later.

• The private placement, expected to be completed by 3Q17, will be used to pay staff salaries and allowances, rental and utilities, project consultancy cost and other overhead costs. (The Star Online)

• Trive Property Group Bhd is proposing to issue up to 500 mln new shares to Australian-based Macquarie Bank Ltd to raise up to RM60.5 mln to fund its residential development project in Kertih, Terengganu.

• Following the proposed exercise, Macquarie Bank will emerge as the biggest shareholder in Trive Property, although the bank does not intend to be a controlling shareholder. (The Star Online)

• RHB Islamic Bank Bhd, the Islamic banking arm of RHB Bank Bhd, will manage a RM3.0 mln fund for the SME Micro Financing (IMProUD3) and another RM8.5 mln under the Facilitation Fund (IMProUD1&2) programmes by the Iskandar Regional Development Authority (IRDA).

• The fund is aimed at spurring growth for bumiputra entrepreneurs in the local small and medium enterprise ecosystem in Johor. (The Edge Daily)

• Crest Builder Holdings Bhd is planning on tendering for about RM1.8 bln worth of projects, with more upcoming tenders in the next few months. Currently, it has an outstanding order book of RM1.1 bln. The group targets to register better performance in 2017 as several projects under its construction division reach their tail end. (The Edge Daily)  

Source: Mplus Research - 8 Jun 2017