• The FBM KLCI (-0.5%) was lacklustre, amid continued foreign outflows and selling pressure in telco heavyweights. The majority of the lower liners also finished lower, with the exception of the FBM Ace (+0.3%). Meanwhile, the technology (+0.7%) sector was the sole advancer amongst its peers on Tuesday’s close.

• Market breadth was negative as losers outpaced winners on a ratio of 311-to- 544. Meanwhile, traded volumes fell by 6.2% to 1.81 bln shares amid thin trading interest ahead of the Aidilfitri holiday celebrations.

• Major laggards on the Main Board include BAT (-58.0 sen), Hong Leong Financial Group (-36.0 sen), Petronas Gas (-22.0 sen) and Genting (-11.0 sen). Maxis (-26.0 sen) continued to see selling pressure, following its cash call to raise up to RM1.64 bln. Other decliners were United Plantations (-50.0 sen), Sapura Energy (- 18.0), United U-Li Corporation (-13.0 sen), OCB (-10.5 sen) and Heineken Malaysia (- 10.0 sen).

• In contrast, Ajinomoto (+32.0 sen), Vitrox (+28.0 sen), Engkah (+24.0 sen), JHM Consolidation (+24.0 sen) and Panaonic Manufacturing (+20.0 sen) gained momentum on Tuesday. Banking heavyweights like Maybank (+1.0 sen) and RHB Bank (+1.0 sen) topped the keyindex gainers’ list, followed by PPB (+8.0 sen), Hap Seng Consolidated (+1.0 sen) and IHH Healthcare (+1.0 sen).

• Asian equities finished mostly in the red, as investors look forward to the potential inclusion of mainland Chinese stocks into the MSCI’s emerging market benchmark indices. The Shanghai Composite index and the Hang Seng fell 0.1% and 0.3% respectively, as investors booked profits ahead of the China’s fourth attempt to enter the MSCI’s emerging markets indices. Japanese stockmarkets rallied, however, with the Nikkei notching 0.8% to close near its two-year high, lifted by a weaker Yen. ASEAN stockmarkets, meanwhile, were mostly down yesterday.

• Wall Street was painted in red, weighed down by renewed selling pressure in energy stocks as oil prices tanked following rising production from Libyan and Nigerian producers. The Dow lost 0.3%, albeit slightly offset by gains in healthcare and consumer staples-related stocks. On the broader market, both the S&P 500 and Nasdaq declined by 0.7% and 0.8% respectively.

• Earlier, key European indices reversed previous gains, alongside O&G-related stocks as oil prices slid towards the bearmarket territory. The FTSE was 0.7% lower on profit-taking in energy and materials-related counters, while the CAC lost 0.3% to 5,293.7 points. The DAX also narrowed by 0.6% with nine-of-ten sectors in the red.

The Day Ahead

• It appears that the selling is becoming more prevalent with the dearth of fresh leads and toppish market valuations to leave the key index at the 1,780 support level. This is also leaving the market at the crossroads, but we think that the downside risk has heightened as the buying interest is waning, as evidenced by the thinner market volumes of late.

• Therefore, we think the market could head lower over the near term with the 1,773 level providing an intermediate support, followed by the 1,770. In the meantime, any rebound will be weak, in our view, due to the insipid buying interest and is likely to be capped at 1,787 level. ? Similar conditions are expected to extend to the lower liners and broader market shares with the buying interest thinning ahead of the upcoming Hari Raya break.

Company Briefs

• Top Glove Corp Bhd is planning to manufacture condoms for the export market with an initial investment of RM30.0 mln as part of diversification to expand its earnings base.

• Top Glove intends to build the factory on a five ac. site in Klang. It will kick off production with 20 lines first. The company is targeting to set up the plant a year from now. (The Star Online)

• Selangor Dredging Bhd (SDB) is selling its headquarters Wisma Selangor Dredging, located in the city centre, for RM480.0 mln in cash to Golden Eagle Realty Sdn Bhd. The property developer expected to make a gain of RM146.8 mln from the proposed sale. This translates into a 32- sen improvement in EPS.

• The 30-year-old Wisma Selangor Dredging has a market value of RM372.1mln and audited net book value of RM318.0 mln as at 31st March 2016.

• Of the RM480.0 mln gross proceeds, the largest portion (RM248.8 mln) will be used to fully settle the redemption sum owing to Public Bank to release the existing lien-holder’s caveat and the bank’s interest over the sale property. A sum of RM103.1 mln will be set aside for the SDB group’s working capital and RM81.0 mln will be distributed to shareholders via a special cash dividend. (The Star Online)

• Malakoff Corporation Bhd's Managing Director, Datuk Wira Azhar Abdul Hamid is resigning with effect from 30th June 2017. Tan Sri Syed Zainol Anwar ibni Syed Putra Jamalullail is also stepping down as its Independent Chairman with effect on 20th June 2017.

• Datuk Wira Azhar is resigning due to personal and professional reasons. He was appointed as the Group Managing Director on 1st May 2016. (The Star Online)

• Berjaya Sports Toto Bhd’s (BToto) 4QFY17 net profit fell 30.7% Y.o.Y to RM72.5 mln due to higher prize payout and higher operating expenses as well as lower contribution from the Philippine Gaming Management Corporation (PFMC). Revenue for the quarter ended marginally lower by 0.5% Y.o.Y to RM1.47 bln.

• For FY17, cumulative net profit declined 21.8% Y.o.Y to RM241.3 mln. Revenue for the year, however, increased 3.1% Y.o.Y to RM5.73 bln. A dividend of three sen a share was announced. (The Star Online)

• Sapura Resources Bhd is partnering Destini Bhd to strengthen its aviation business by expanding its customer base to include government and regional markets. The two companies will take up equal ownership in joint venture company Urban Fleet Sdn Bhd.

• The JV company will take part in the sale of rotary wing and fixed wing aircraft, supply and provisioning of maintenance, repair and overhaul services in relation to aircraft and helicopters, and the provision of programmes like wet leasing and dry leasing of aircraft. (The Edge Daily)

• Axiata Group Bhd is buying a Pakistani tower company for US$90.0 mln (RM385.5 mln) through its whollyowned subsidiary, edotco Pakistan Pvt Ltd. The acquisition of Tanzanite Tower Pvt Ltd, which is wholly-owned by Tower Share Pvt Ltd, is expected to expand edotco’s presence in Pakistan with a sizeable portfolio of about 700 towers. (The Edge Daily)

• Bursa Malaysia has publicly reprimanded Lay Hong Bhd and fined eight of its directors a total of RM750,000 for breaching regulations regarding the company's response to unusual market activity (UMA) queries on 2nd November 2015 and 19th January 2016.

• Lay Hong had announced a corporate exercise involving a proposed bonus issue, share split and issuance of free warrants two weeks after denying that there were any corporate developments in response to the queries. The regulator has reported the Lay Hong’s announcements had not been accurate, balanced, fair and failed to contain sufficient information to enable investors to make informed decisions. (The Edge Daily)

• Astro Malaysia Holdings Bhd has launched its digital marketing arm, Blaze Digital which will offer integrated digital solutions for marketers across Astro's 21 digital brands as well as 11 independent digital publications. Blaze Digital has a cumulative average of 20.0 mln users and a reach of over 100.0 mln people on Facebook monthly, putting it in a strong position to help marketers connect directly with a growing socially-connected and tech-savvy population. (The Edge Daily)

• CCM Duopharma Biotech Bhd expects its gearing to increase to 0.9x, from 0.3x following its uptake of RM280.0 mln Islamic financing facilities from Ambank Islamic Bhd. The facilities will be used as capital expenditure for its new plants and machinery as well as to support its project and business operations. (The Edge Daily)

• Puncak Niaga Holdings Bhd's 98.7%- owned subsidiary in China, Sino Water Pte Ltd, is disposing of its loss-making unit Xinnuo Water (Binzhou) Co Ltd for 350,000 Renminbi or RM220,500. The sale to Binzhou Haifu Water Co Ltd would limit the group’s losses from the investment as the group plans to exit its businesses in China. (The Edge Daily)

• Ire-Tex Corp Bhd has failed to meet a deadline to pay the interest payment on its Irredeemable Convertible Unsecured Loan Stocks that were issued in 2014, which may constitute an event of default. It was supposed to pay the annual interest for the ICULS, which would expire in 2019 by 10th June 2017.

• According to the trust deed governing the ICULS, failure in paying the interest in the first place may constitute an event of default and Ire-Tex is seeking the trustee's advice on the matter.

• Meanwhile, it has also applied to the Companies Commission of Malaysia for more time — up to 27th August 2017 to hold its Annual General Meeting (AGM) for 2017, which it was supposed to hold by 30th June 2017. It would miss the AGM deadline because the company had been served with a special notice to remove its board of directors. (The Edge Daily)  

Source: Mplus Research - 21 Jun 2017