• The FBM KLCI (-0.02%) ended on a flat note yesterday on weakness in selective banking heavyweights after the key index traded in a choppy manner. The weakness also stemmed from the lower crude oil prices amid the unexpected inventory build-up in the U.S. The lower liners, however, ended mildly positive as the FBM Small Cap and FBM Fledgling added 0.1% and 0.4% respectively, while the broader market closed mixed.

• Market breadth stayed negative as decliners pipped advancers on a ratio of 459-to-419 stocks. Trading volumes declined 16.3% to 1.97 bln shares amid the lack of fresh local catalyst.

• Banking heavyweights like Hong Leong Bank (-18.0 sen), Hong Leong Financial Group (-14.0 sen), RHB Bank (-9.0 sen) and AmBank (-5.0 sen) topped the FBM KLCI decliners list, while Telekom slipped 9.0 sen. Amongst the biggest losers on the broader market were United Plantations (+44.0 sen), Bursa Malaysia (- 26.0 sen), Tasek Corporation (-20.0 sen), Petron Malaysia (-14.0 sen), KESM Industries (-10.0 sen) and CAB Cakaran (- 9.0 sen).

• Glove manufacturers like Hartalega (+53.0 sen), Kossan (+24.0 sen) and Top Glove (+24.0 sen) advanced, while other notable gainers were JF Technology (+40.0 sen) and Nestle (+36.0 sen). Key winners on the local bourse were BAT (+30.0 sen), Public Bank (+16.0 sen), Petronas Gas (+6.0 sen), IHH (+4.0 sen) and Petronas Dagangan (+4.0 sen).

• Japanese equities declined as the Nikkei fell 0.4% on weaker-than-expected 1Q2017 GDP data that only grew 0.3% Q.o.Q. The Shanghai Composite added 0.3% to record its third straight winning day, while the Hang Seng Index gained 0.3% to close above the 26,000. psychological level. ASEAN stock indices ended mixed.

• U.S. stockmarkets edged marginally higher after former FBI Director James Comey’s testimony concluded without any significant revelations. Both the Dow and S&P 500 added 0.04% and 0.03% respectively, while the Nasdaq (+0.4%) closed at a fresh record high at 6,321.77 points.

• European benchmark indices ended mixed after the European Central Bank kept its benchmark interest rates unchanged and signalled potential increases in its bond buying programme, if required. The DAX gained 0.3%, but the CAC slipped 0.02%. The FTSE ended 0.4% lower as investors await the election results, where exit polls showed no clear winners.

The Day Ahead

• With leads still far and in-between, we see little buying impetus on Bursa Malaysia ahead of the long weekend and we expect the key index to continue drifting lower over the near term. In addition, the fewer compelling buys is also seeing more market players retreating to the sidelines and this likely to see volumes continuing to thin.

• Consequently, we see the market headed back to the 1,780 support level amid the lack of buying interest and continuing wariness over overseas events like the results of the U.K election results and the pressured oil prices. On the upside, the resistance is still at the recent high of 1,795.

• We also see retail players locking in some profit on the lower liners and broader market shares after their gains over the past two days.

COMPANY BRIEFS

• The Malaysian Anti-Corruption Commission (MACC) has seized a trolleyload of documents as well as computer files from the headquarters of Felda Global Ventures Holdings Bhd (FGV), after being informed by suspended CEO Datuk Zakaria Arshad on allegations of graft and power abuse in the company. (The Edge Daily)

• Moody's Investor Service said the proposed merger between AMMB Holdings Bhd (AmBank) and RHB Bank Bhd is credit positive for the former as its distribution, funding resources and systemic importance would benefit from being a part of a larger Malaysian banking group.

• On the hand, the potential advantages to RHB are discounted by its likely challenges to rationalise the organisational structure and infrastructure of the newly-merged entity. (The Star Online)

• Scomi Engineering Bhd has announced that the KL Monorail four-car train fleet, which was introduced in December 2014, was independently certified before it commenced operations. This comes after Rapid Rail Sdn Bhd (RRML) Chief Executive Officer, Datuk Zohari Sulaiman said that RRML has grounded all four-car train sets after it found a few areas of safety risks. The findings were concurred by the Land Public Transport Commission (SPAD). (The Star Online)

• Asia Bioenergy Technologies Bhd has been awarded a 30-month subcontracting work worth RM220.0 mln from Tenisha Construction Sdn Bhd for subcontract works within the Pengerang Integrated Petroleum Complex.

• The work includes designing, erecting, inspecting, maintaining and dismantling of scaffolding and formwork systems on-site. (The Edge Daily)

• AirAsia Bhd has increased its stake in Rokki Sdn Bhd, a company which supplies inflight entertainment and communication systems to the airline, from 73.0% to 83.0%. The additional equity stake worth RM2.5 mln would allow the airline to enjoy additional share of profits and a higher equity stake for strategic maneuverability, said the budget carrier. (The Star Online)

• Sinmah Capital Bhd (previously known as Farm’s Best Bhd) has formed a 70:30 joint-venture (JV) with Encorp Bhd to carry out a mixed development project in Bukit Katil, Melaka.

• The RM865.0 mln project, which will be built on a 77.9-ac. site, marks Sinmah Capital’s diversification into property development and construction sector. (The Edge Daily)

• Ire-Tex Corp Bhd has received a special notice from its key shareholder, Elite Cosmo Group Ltd, together with another shareholder, Tan Yeang Tze, to remove four directors from the company and to appoint two new directors. (The Edge Daily)  

Source: Mplus Research - 9 Jun 2017