• The FBM KLCI (+0.2%) started off the week on a slightly positive note, underpinned by gains in selective banking and telco heavyweights as the key index extended its gains to close at its highest level over the past two weeks. Amid the mixed broader market, the lower liners – the FBM Small Cap (-0.1%), FBM Fledgling (-0.2%) and FBM ACE (-0.8%), however, all ended in the negative territory.

• Market breadth turned negative as decliners outnumbered advancers on a ratio of 516-to-314. Traded volumes fell 10.5% to 1.67 bln shares as investors retreated to the sidelines amid the negative market sentiment.

• BAT (+72.0 sen) continued to top the big board gainers list, while other significant advancers were Hong Leong Financial Group (+26.0 sen), Hong Leong Bank (+12.0 sen), Astro (+9.0 sen) and DiGi (+9.0 sen). Amongst the biggest gainers on the broader market include Nestle (+64.0 sen), Allianz (+44.0 sen), HCK Capital (+44.0 sen) and Dutch Lady (+30.0 sen). Mega First Corporation added 7.0 sen after its hydropower project in Laos in on track to meet its completion date.

• Notable decliners on the broader market were Chin Teck Plantations (-15.0 sen) Aluminium Company of Malaysia (-12.0 sen), Scientex (-11.0 sen) and Tien Wah (- 11.0 sen). Cycle & Carriage Bintang slipped 11.0 sen after reporting a disappointing set of quarterly earnings. Meanwhile, Genting (-5.0 sen), Westports (-4.0 sen), IHH (-4.0 sen), Axiata (-3.0 sen) and MISC (-2.0 sen) were the FBM KLCI biggest decliners.

• Japanese equities extended their losses as the Nikkei fell 0.6% to close below the 20,000 psychological level after the Japanese Yen firmed against the Greenback. Both the Hang Seng Index and Shanghai Composite added 0.5% and 0.4% respectively, anchored by gains in consumer and technology stocks. ASEAN indices, meanwhile, closed mixed.

• U.S. stockmarkets ended mostly lower as the Dow (-0.3%) extending its losses after existing home sales fell below consensus estimates. On the broader market, both the S&P 500 slipped 0.1% after managed to trim most of its intraday losses, while the Nasdaq rose 0.4% to close at a fresh record high level.

• European benchmark indices ended mostly lower as the FTSE and DAX declined 1.0% and 0.3% respectively after the former saw the International Monetary Fund trimmed its’ GDP growth forecast to 1.7% (from 2.0%). The CAC gained 0.2% after the manufacturing PMI data at 55.4 in June came above economists’ estimates.

The Day Ahead

• We continue to think that the market is devoid of any significant strength to ensure that gains will be broad-based. Hence, any further gains will remain superficial amid the continuing lack of noteworthy leads.

• As it is, most market players are staying on the sidelines due to the lack of fresh leads and with valuations remaining stretched, the buying interest is likely to remain thin, thus leaving most lower liners and broader market shares on the wayside.

• Even with the key index above the 1,760 level, we think the lack of buying interest could limit the follow through buying interest and we think the key index could retreat back below the level once again over the near term.

COMPANY BRIEFS

• CIMB Group Holdings Bhd's subsidiary, Touch 'n Go has signed an equity jointventure agreement with Alipay, a subsidiary of Ant Financial Services Group to jointly launch a new e-wallet platform in Malaysia.

• The JV company, in which Touch ’n Go will hold a majority stake, will develop an e-wallet for use via mobile phones by individuals and small and medium enterprises (SMEs) in Malaysia, before bringing in banks and merchants to link their services with the platform. (The Edge Daily)

• Lotte Chemical Titan Holding Bhd (LCT) has received about 34.8 mln shares share buy-back requests from retail investors and MITI-approved non-cornerstone Bumiputera investors eligible for the offer, representing a take up rate of 58.8%.

• The buy-back offer was made after the group cut its institutional offering by 23.4% and reduced offer price to RM6.50 (from RM8.00) a week before its listing on 11th July, 2017. The action has reduced the proceeds for the development of its Integrated Petrochemical Facility in Indonesia by RM226.3 mln to RM3.54 bln. (The Edge Daily)

• Iskandar Waterfront City Bhd’s (IWCity) substantial shareholder, Creed Asia Development (M) Sdn Bhd has reduced its shareholding in IWCity to 5.23%, from 6.9%, following the disposal of 12.6 mln shares last week.

• Shares of IWCity, which is in the midst of a merger with its sister company Iskandar Waterfront Holdings Sdn Bhd (IWH), have been actively traded over the past week, lifted by speculations that it is in the running for the Bandar Malaysia development deal again after losing the project on 3th May, 2017. (The Edge Daily)

• Rohas Tecnic Bhd has inked an agreement with shareholders of EPCC company, HG Power Transmission Sdn Bhd to acquire 75.0% stake in the latter — at a revised price of RM91.7 mln.

• The share sale agreement was a followup to a Heads of Agreement (HoA) signed in 10th April 2017 between Rohas Tecnic and HGPT’s two shareholders, PT Safe Tower Systems Sdn Bhd and Kemuncak Agresif (M) Sdn Bhd, where it first proposed a price of RM101.7 mln for 4.9 mln shares in HGPT. (The Edge Daily)

• Axis Real Estate Investment Trust (REIT) has proposed to buy lands measuring a total of 126.9 ac. together with the buildings on it for RM155.0 mln cash from five subsidiaries of Wah Seong Corp Bhd.

• The aforementioned lands are located within Kawasan Perindustrian MIEL in Gebeng, Kuantan, Pahang. The group will be funding the acquisitions by existing and new bank borrowings, and expects the deal to be completed by end 2017.

• Separately, Axis REIT saw its 2017 property income grow to RM36.4 mln, from RM35.8 mln last year, while total trust revenue was flat at RM41.6 mln against RM41.8 mln a year ago. On the other hand, distribution per unit rose 5.9% Y.o.Y to 2.17 sen in 2Q2017, compared to 2.05 sen in the previous corresponding period. (The Edge Daily)

• Bright Packaging Industry Bhd’s 3QFY17 net loss narrowed to RM403,000, from RM503,000 in the same period last corresponding year, despite a 41.5% Y.o.Y fall in revenue to RM10.5 mln, from RM17. 9 mln a year earlier. The improved profitability was mainly due to lower cost of sales.

• For the cumulative 9MFY17, however, the group posted a net loss of RM2.5 mln, from a net profit of RM177,000 last year, weighed down by revenue which declined 44.2% Y.o.Y to RM26.8 mln, from RM48.0 mln in 9MFY16. (The Edge Daily)

• ManagePay Systems Bhd is planning to list its associate, Trustgate Bhd on Bursa Malaysia’s Leading Entrepreneur Accelerator Platform (LEAP) Market.

• MPay first bought into Trustgate when it acquired 29.5% equity stake in the latter for RM1.8 mln cash in September 2015. (The Edge Daily)  

Source: Mplus Research - 25 Jul 2017