• Taking cue from the bearish sentiment in the regional stockmarkets, the FBM KLCI lingered in the negative territory for the entire session amid escalating geopolitical conflict between the U.S. and North Korea. The majority of the lower liners, however, rebounded – led by the FBM Ace (+0.9%) and the FBM Fledgling (+0.2%). The broader market was splashed in red with the exception of the Industrial Products (+0.2%) sub-sector due to the rally in metal-related products.

• Market breadth stayed tepid as losers beat advancers on a ratio of 452-to-317 stocks. Traded volume also took beating, erasing 31.2% from the previous day to 1.42 bln shares as investors stayed on the sidelines amid renewed geopolitical uncertainties in the Korean Peninsula.

• Significant key index decliners were BAT (-RM1.50), MISC (-17.0 sen), Hong Leong Financial Group (-16.0 sen), Petronas Gas (-14.0 sen) and AmBank (-10.0 sen). Similarly, KESM Industries (-42.0 sen), Petron Malaysia (-31.0 sen), United Plantations (-28.0 sen) and Unisem (-17.0 sen) led the broader market into the negative territory. Hartalega, meanwhile, fell 22.0 sen, on the back of profit-taking activities despite higher-than-expected quarterly results.

• On the flip side, metal-related counters like Press Metal (+33.0 sen) and Ann Joo (+17.0 sen) rallied on expectations of stronger steel prices amid governmentimposed capacity bans. Other broader market winners include Perusahaan Sadur Timah (+25.0 sen), Hai-O (+18.0 sen) and Heineken Malaysia (+18.0 sen). Meanwhile, Petronas Dagangan (+6.0 sen), IHH Healthcare (+4.0 sen), Maybank (+2.0 sen), Astro (+1.0 sen) and Axiata (+1.0 sen) beat other blue-chips to close higher on Wednesday. ? Key regional benchmark indices slipped into the negative territory as rising geopolitical tensions between Pyongyang and the U.S. put a dent in market sentiments. The Nikkei (-1.3%) extended its losses for the second-straight day, driven by a stronger Yen as investors piled into safe-haven assets, while the Hang Seng index closed 0.4% lower to 27,757.1 points. Similarly, the Shanghai Composite index weakened by 0.2%, weighed down by lower-than-anticipated Chinese trade data. The majority of ASEAN stockmarkets were painted in red on Wednesday’s close.

• Major U.S. indices tumbled on Wednesday, albeit rebounding from intra-day lows amid a political spat between the U.S. and North Korea. The Dow lost 0.2%, weighed down by Walt Disney (-3.9%), while the S&P 500 (-0.04%) inched into the red. The Nasdaq, meanwhile, also shaved 0.3% to closed at 6,352.3 points.

• Earlier European stocks retreated, weighed down by fears of a war outbreak between two nuclear-armed superpowers. The FTSE declined 0.6%, on the back of losses in financial and healthcare-related stocks, while the CAC and the DAX slipped 1.4% and 1.1% respectively as investors dumped equities in favor for safe-haven assets.

The Day Ahead

• The 1,780 points level remains a formidable level for the key index to clear and yesterday’s decline was very much to form with profit taking sapping the market’s recent uptrend. For now, we continue to think that the uptrend will pause temporarily with follow-through buying appearing weaker as valuations again reach toppish levels.

• Furthermore, global market sentiments are showing cooling signs that will further sap the upside bias, in our view, as geopolitical concerns are spiking up again. Consequently, we think stocks on Bursa Malaysia will continue to consolidate over the near term with the 1,770 level support coming into play again.

Company Briefs

• ManagePay Systems Bhd (MPay) has entered into a joint venture agreement (JV) with Contracts Rise Sdn Bhd to procure mobile virtual network operator (MVNO) licence from the Malaysian Communication And Multimedia Commission (MCMC) and to launch and promote self-branded MVNO starter pack in Malaysia.

• MPay will hold a 40.0% stake in the JV company while Contract Rise will hold the remaining 60.0%. Mpay will fund the investment in the JVC through its internally generated funds. (The Star Online)

• HSS Engineers Bhd’s (HEB) 30.0%-owned associate, HSS Integrated Sdn Bhd (HSSI) has clinched a RM16.5 mln contract to provide preliminary design consultancy services for the first 220 km of the East Coast Rail Link (ECRL). HEB expects to complete the job in 4Q2017.

• The ECRL is a 688 km electric railway system that will link the east coast states to the Greater Klang Valley. Its groundbreaking ceremony was held on 9th August 2017 in Kota Sultan Ahmad Shah in Pahang. (The Star Online)

• TA Global Bhd is seeking to sell the remaining 24.3 ac. of undeveloped land at its Little Bay Cove development in Sydney, Australia, for A$245.0 mln (RM827.8 mln).

• The property development and investment group stands to gain about A$102.0 mln (RM344.9 mln) pretax from the disposal of the freehold residential land to Karimbla Properties (No 50) Pty Ltd (KPPL), a unit of Meriton Properties Pty Ltd.

• The proposed disposal will allow TA Global to unlock the value of the property which was currently pending development at about 29.0% premium to the indicative valuation as appraised by m3property (NSW) Pty Ltd.

• Of the A$245mil gross proceeds, TA Global will set aside A$120.0 mln (RM405.9 mln) to repay bank borrowings, A$100.0 mln (RM338.3 mln) to buy properties, assets or businesses and A$20.0 mln (RM67.7 mln) for working capital. (The Star Online)

• MISC Bhd's 2Q2017 net profit fell 58.8% Y.o.Y to RM556.5 mln as petroleum shipping and oil and gas structure construction revenue dropped, coupled with asset impairment losses on ships, property, plant and equipment amounting to RM133.6 mln. Revenue for the quarter declined 3.8% Y.o.Y to RM2.30 bln.

• For 1H2017, cumulative net profit fell 35.9% Y.o.Y to RM1.23 bln. Revenue for the quarter, however, gained 10.4% Y.o.Y to RM5.29 bln. A dividend of 7.0 sen per share, payable on 7th September 2017, was declared. (The Edge Daily)

• Pos Malaysia Bhd and its Tunisian counterpart, La Poste Tunisienne has signed a bilateral arrangement for collaboration in the e-commerce business. The arrangement covers cooperation in areas such as developing and enhancing the ecommerce portfolio in terms of exchanging e-commerce parcels and small packets between the two parties at a competitive price.

• Besides that, the agreement will also serve as a platform for both parties to share information with regards to enhancing the e-commerce products, services and activities globally. (The Edge Daily)

• Boustead Heavy Industries Corp Bhd’s (BHIC) 2Q2017 net profit declined 5.2% Y.o.Y to RM23.9 mln on lower topline. Revenue for the quarter slipped 37.2% Y.o.Y to RM43.8 mln.

• For 1H2017, cumulative net profit surged 328.5% Y.o.Y to RM26.7 mln. Revenue for the period, however, fell 9.1% Y.o.Y to RM120.6 mln. (The Edge Daily)

• Minetech Resources Bhd has bagged another subcontract worth RM35.2 mln for works at a Mass Rapid Transit 2 (MRT2) station from MMC Gamuda KVMRT (UGW) Joint Venture. The subcontract is for the construction and completion of excavation works, rock strengthening, steel strutting and other associated works for station box, entrances and paid link at the Chan Sow Lin station. Work will commence on 15th August 2017. (The Edge Daily)

• Cepatwawasan Group Bhd's 2Q2017 net profit jumped 90.9% Y.o.Y to RM9.7 mln, on increases in average selling prices of crude palm oil, palm kernel and fresh fruit bunches. Revenue for the quarter added 37.2% Y.o.Y to RM70.4 mln.

• For 1H2017, cumulative net profit jumped 241.0% Y.o.Y to RM15.9 mln. Revenue for the period gained 42.7% Y.o.Y to RM129.4 mln. (The Edge Daily)

• Reach Energy Bhd has decided not to go ahead with the RM180.0 mln private placement it proposed in May 2016 due to weak market conditions. The group had earlier proposed the private placement of up to 305.1 mln new shares as a means to repay shareholders who voted against its qualifying acquisition of a 60.0% stake in Palaeontolol BV for US$175.9 mln (RM754.4 mln). (The Edge Daily)  

Source: Mplus Research - 10 Aug 2017