• The FBM KLCI (-0.2%) finished lower on Thursday, despite the prevailing positive sentiment on the regional markets as well as the U.S. stockmarkets overnight, weighed down by selling pressure on telco heavyweights. The majority of the lower liners, however, continued its upward momentum, with the exception of the FBM Small Cap (-0.1%). Meanwhile, only three-of-ten sub-sectors in the broader market ended in the negative territory yesterday.
• Market breadth turned positive as advancers outperformed the decliners on a ratio of 460-to-362. Traded volumes gain 3.2% to 1.79 bln shares amid bargain-hunting activities on the lower liners.

• Significant key-index underperformers were Axiata (-24.0 sen), Petronas Gas (- 22.0 sen), Digi (-17.0 sen), Hap Seng Consolidated (-16.0 sen) and PPB Group (-8.0 sen). Meanwhile, Bursa Malaysia (- 12.0 sen), Iskandar Waterfront City (-10.0 sen), Dutch Lady (-10.0 sen), Lysaght (- 9.0 sen) and Kluang Rubber (-8.0 sen) led the broader market underperformers.

• On the opposite side of the trade, BAT (+22.0 sen), Hong Leong Financial Group (+16.0 sen), CIMB (+3.0 sen) ad Genting Malaysia (+3.0 sen) buoyed the broader market. Meanwhile, Genting (+12.0 sen) rose 12.0 sen on bargain-hunting activities after the recent selldown. Major movers on the Main Board were Petronas-affiliated stocks like Petronas Dagangan (+8.0 sen) and Petronas Chemicals (+5.0 sen), followed by Kuala Lumpur Kepong (+10.0 sen), Ambank (+6.0 sen) and MISC (+4.0 sen).

• Asian stockmarkets rallied on Thursday, as investors cheered the Federal Reserve’s dovish policies. The Nikkei flatlined, while the Shanghai Composite index jumped 0.6% to 3,218.2 points, boosted by upbeat trade data from China. The Hang Seng index was also higher by 1.2%, closing at a two-year high – led by gains in telecommunication services (+1.6%). Subsequently, most ASEAN equities finished in the positive territory yesterday.

• U.S. equities closed positively again, lifted by the bullish sentiment in retailers as investors look forward to quarterly results from major banks on Friday. The Dow (+0.1%) notched a new record high, on the back of gains in financials-related stocks. The S&P 500 advanced 0.2% - boosted by Target (+4.8%) after the latter’s second quarter earnings exceeded analysts’ expectations, while the Nasdaq grew 0.2% to 6,274.4 points.

• Key European bourses ended mostly higher, rebounding from earlier losses amid quarterly corporate results and a series of economic data. The FTSE (- 0.1%) slipped into the red, after losses in drug maker Astra Zeneca (-3.5%) offset gains in retailers. On the other hand, the DAX (+0.1%) eked out shallow gains, while the CAC gained 0.3% as investors digested inflation data from both countries.

The Day Ahead

• It was a disappointment as the key index failed to carry over the minute gains it attained on Wednesday to leave the key index in a state of flux again. It has also left the key index in the oversold region and a rebound is already. Already, the lower liners and broader market shares are recovering with the index heavyweights continuing to lag.

• Although conditions remain flux, we expect the index heavyweights to play catch up and mount a rebound and play catch up to the regional gains over the near term amid the still positive global market environment.

• This could see the key index pushing towards 1,760 level over the near term, with the 1,750 level remaining the key near term support.

• Meanwhile, we expect the interest on the lower liners and broader market shares to continuing picking up with the improved environment for trading activities. However, we also expect quick profit taking activities to limit the upsides.

Company Briefs

• Sunway Bhd is buying 4.5-ac. of freehold land in Jalan Belfield to undertake a mixed-use development featuring serviced apartments and lifestyle retail units with a combined gross development value of RM1.10 bln.

• Sunway’s wholly-owned unit, Sunway City Sdn Bhd signed a sales and purchase agreement with Genting Bhd’s Chairman and Chief Executive Officer Tan Sri Lim Kok Thay, his mother Puan Sri Lee Kim Hua and three beneficial owners to buy the land for RM165.0 mln.

• The purchase price which works out to RM836.18 psf and was arrived at based on a willing-buyer willing-seller basis after taking into account the development potential and the internal rate of return. (The Edge Daily)

• Hua Yang Bhd’s 1QFY18 net profit plunged 92.8% Y.o.Y to RM1.7 mln due to fewer ongoing projects on hand. Revenue for the quarter contracted 62.5% Y.o.Y to RM47.9 mln. Hua Yang’s unbilled sales as at 1QFY18 stood at RM204.3 mln. (The Edge Daily)
• Dagang NeXchange Bhd (DNeX) has been appointed as the reseller of Financio, a cloud-based accounting software in Malaysia and Indonesia. Designed for users with little accounting knowledge, Dagang Net will target to sell Financio to start-up firms, small business owners and micro small and medium enterprises.
• Financio is developed by Asian Business Software Solutions Sdn Bhd (ABSS), a 51.0%-owned subsidiary of Censof Holdings Bhd. Censof is currently DNeX’s largest shareholder with a 17.5% stake. (The Edge Daily)

• Axiata Group Bhd and subscription video on demand service, Iflix have signed a non-binding Memorandum of Understanding (MoU) with regards to the expansion of their strategic collaboration.

• The regional collaboration is to bring the best in entertainment to more than 125.0 mln Axiata customers in six countries. With existing partnerships with Celcom Axiata Bhd in Malaysia and Dialog Axiata PLC in Sri Lanka, the collaboration is intended to extend to PT XL Axiata Tbk in Indonesia, Smart Axiata Co Ltd in Cambodia, Robi Axiata Limited in Bangladesh and Ncell Private Limited in Nepal. (The Edge Daily)

• MMC Corp Bhd has announced that its wholly-owned unit, Johor Port Bhd has disposed of its 5.1 mln shares — equivalent to a 51.0% stake in Kotug Asia Sdn Bhd to Kotug Malaysia Sdn Bhd for RM4.1 mln cash, which is part of its ongoing internal restructuring exercise.

• Following completion of the stake disposal, Kotug Asia has ceased to be a subsidiary of Johor Port. (The Edge Daily)  

Source: Mplus Research - 14 Jul 2017