Global Uncertainties To Dampen Sentiments

• The FBM KLCI closed with minute gains last Friday, despite lingering uncertainties in the global backdrop. The key index also extended its gains by 0.7% W.o.W. to 1,788.9 points. All the lower liners ended higher, with the FBM ACE (+0.8%) at the helm, while the industrial, consumer products, properties and plantations subsectors bucked the general market sentiment to close in the red.

• Market breadth was favourable as advancers beat decliners on a ratio of 476-to-396. Traded volumes also fell 2.9% to 1.91 bln shares, amid thin trading due to the lack of catalysts to push the local bourse significantly higher.

• Petronas-linked companies - Petronas Dagangan (+18.0 sen) and Petronas Gas (+12.0 sen) pushed the key-index higher, followed by Tenaga (+22.0 sen), Ambank (+13.0 sen) and Hong Leong Financial Group (+10.0 sen). Meanwhile, broader (-market movers were Tasek (+20.0 sen), MPI (+18.0 sen), Kossan Rubber Industries (+15.0 sen), Cocoaland (+14.0 sen) and Cycle & Carriage Bintang (+11.0 sen).
   
• On the flip side, consumer products bellwethers like Dutch Lady (-68.0 sen) and Nestle (-40.0 sen) declined, while other losers include Khind (-13.0 sen), Heng Yuan Refining (-11.0 sen) and UMW Holdings (-11.0 sen). Main Board decliners, meanwhile, included BAT (-30.0 sen), Kuala Lumpur Kepong (-10.0 sen), MISC (-9.0 sen), Astro Malaysia (-4.0 sen) and CIMB (-4.0 sen).
   
• Key Asian benchmark bourses were splashed in red following a reversal in U.S. technology giants on concerns of overvaluations after months of sharp gains. The Nikkei (-0.5%) declined on losses in telecommunication services and information technology-related stocks The Hang Seng also finished 1.2% lower, while the Shanghai Composite (-0.6%) retreated, weighed down by concerns of the economic stability in China amid the persisting credit tightening measures. Most ASEAN indices also finished weaker on Monday.
   
• Wall Street finished in the negative territory overnight, dragged down by losses in large-cap technology counters like Apple, Facebook and Google. The Dow ended 0.2% lower to close just above 21,200.0 points. On the broader market, the S&P 500 lost 0.1%, while tech-heavy Nasdaq declined 0.5% ahead of the Federal Reserve’s meeting that ends on Wednesday.
   
• European equities ended lower overnight, amid the uncertainties in the political landscape in the U.K. and the selldown in U.S. technology stocks. The FTSE fell 0.2%, after the Conservative Party failed to secure its parliamentary majority last week, although losses were capped by the gains in energy stocks as crude oil prices rallied. Meanwhile, both the DAX and the CAC declined by more than 1.0% on Monday’s close.

THE DAY AHEAD

• Global market sentiments are taking a beating following the less-thanconvincing outcome of the British election and the tech-rout in the U.S. markets. We see the above concerns permeating to the local bourse and sentiments are also expected to endure a beating over the near term.
• This is likely to see stocks on Bursa Malaysia weakening as well, particularly among technology related stocks as they are also likely to react negatively to the developments overseas. We also see index heavyweights retreating as the recent gains have left valuations stretched. On the downside, the key index could consolidation back to the key support level of 1,780 level points.

COMPANY BRIEFS

• Bank Negara approved Alliance Financial Group Bhd’s (AFG) proposed corporate reorganisation whereby AFG’s listing status will be taken over by its whollyowned core subsidiary, Alliance Bank Malaysia Bhd.

• The proposed reorganisation will involve, among others, the shareholders of AFG swapping their existing AFG shares for Alliance Bank shares on a 1-for-1 basis, where their number of shares held and percentage shareholdings in AFG will be the same in Alliance Bank. (The Star Online)

• Vivocom International Holdings Bhd’s 78.6% owned indirect subsidiary, Vivocom Enterprise Sdn Bhd (VESB) has terminated a RM240.4 mln construction contract awarded to it last year by Coneff Corp Sdn Bhd.

• This comes just days after Vivocom announced problems with another construction job – the Gateway Klang project – where the group has halted work, although it had not received an official letter of termination from main contractor China Railway Construction Corp that awarded it the subcontract.

• To recap, VESB received the letter of award from Coneff on 20th January 2016 to build two blocks of commercial towers in Sungai Besi, Kuala Lumpur. The towers in Desa Tasik would comprise service apartments, two storeys of retail units, one storey of recreational centre and seven storeys of car parks. The job awarded to VESB was originally expected The Hang Seng also finished 1.2% lower, while the Shanghai Composite (-0.6%) retreated, weighed down by concerns of the economic stability in China amid the persisting credit tightening measures. Most ASEAN indices also finished weaker on Monday.

• UMW Oil & Gas Corp Bhd has received an undertaking and subscription letter from its 45.5% shareholder, Permodalan Nasional Bhd (PNB) for its 14-for-five rights issue, which seeks to raise RM1.81 bln. PNB will fully subscribe and underwrite the rights issue — but shares subscribed will result in its shareholding rising above 65.0% and the shares will be converted into Islamic Redeemable Convertible Preference Shares (RCPS-i) instead. (The Edge Daily)
   
• Astro Malaysia Holdings Bhd’s whollyowned subsidiary, Measat Broadcast Network Systems Sdn Bhd (MBNS) has received the Securities Commission Malaysia's (SC) nod to set up a RM3.00 bln Medium Term notes programme. MBNS is setting a 15-year tenure for the programme, which has CIMB Investment Bank Bhd and RHB Investment Bank Bhd as its joint principal advisers and lead arrangers. (The Edge Daily)

• Pentamaster Corp Bhd has acquired the remaining 40.0% shareholding in its subsidiary, Pentamaster Instrumentation Sdn Bhd (PISB) for RM6.0 mln or RM50.00 per share. PISB is a manufacturer of automated testing equipment and test and measurement systems for the electrical and electronics industry. (The Edge Daily)

• JF Technology Bhd, whose share price has surged in the past month, has been issued with an Unusual Market Activity query by Bursa Malaysia. The company, however, said it is unaware of the reason behind the recent spike. YTD, the stock price has leapt four times from the low of 45 sen on 3rd January 2017. (The Edge Daily)

• Malaysia Airports Holdings Bhd oversaw 10.6 mln flyers in all its operations in May 2017, up 6.3% Y.o.Y. They comprise 5.8 mln local flyers and 4.8 mln international flyers.

• Passenger count in Malaysia increased by 8.5% Y.o.Y in May 2017 to 7.9 mln. Regionally, MAHB posted positive growth in all regions where it operates, except for Africa and Middle East. (The Edge Daily)

• Pasukhas Group Bhd has entered into a joint venture agreement with a foundation, Yayasan Veteran Angkatan Tentera Malaysia, to develop office towers on a 1.2-ac. piece of state leasehold land in Kuala Lumpur.

• Under the deal, Pasukhas, using internal funds and borrowings, will pay RM15.5 mln for the land premium and RM2.0 mln cash to its partner. The foundation will also be entitled to 72,000 sq.ft. of office space and function rooms in the development. (The Edge Daily)

• Mercury Industries Bhd is paying RM7.0 mln cash to acquire construction materials firm, Andaman Marketing Sdn Bhd (AMSB) to expand its revenue stream and complement Mercury Industries’ only remaining business — its construction subsidiary Paramount Bounty Sdn Bhd.

• AMSB has a net asset of RM3.9 mln and the firm has given a profit guarantee of RM1.0 mln per year for the next three financial years from 31st December 2018 to 31st December 2020. (The Edge Daily)

• Permaju Industries Bhd’s 70.0%-owned subsidiary, Hardie Development Sdn Bhd has entered into a second supplemental agreement with Mydin Mohamed Holdings Bhd to make changes to the design and layout of the hypermarket it intends to construct in Menggatal, Kota Kinabalu, Sabah.
   
• The financing and construction of the hypermarket — to be completed within 30 months from the date of approval for the commencement of work, will be funded by internal funds and bank borrowings. (The Edge Daily)

Source: Mplus Research - 13 Jun 2017