• The FBM KLCI finished marginally in the red for the second consecutive session – weighed down by selling pressure on selected banking heavyweights as well as Genting-affiliated counters. The lower liners were painted in red, while eight-often sectors closed lower on Thursday.

• Market breadth was negative as losers beat winners by more than two-fold, while traded volume declined further, losing 10.1% to 1.28 bln shares as investors turn to safe-haven assets amid heightened political risks.

• Genting-related stocks like Genting (-7.0 sen) and Genting Malaysia (-5.0 sen) led the blue-chip gauge lower, followed by RHB Bank (-5.0 sen), Kuala Lumpur Kepong (-4.0 sen) and Maybank (-4.0 sen). Meanwhile, notable broader market decliners were MPI (-60.0 sen), KESM (- 38.0 sen), Heng Yuan Refining (-31.0 sen), Kluang Rubber (-27.0 sen) and Ajinomoto (-18.0 sen).

• HCK Capital (+26.0 sen), MB World Group (+12.0 sen), UMW Holdings (+11.0 sen), Apex Healthcare (+10.0 sen) and Allianz Malaysia (+8.0 sen) topped the gainers’ list yesterday, while banking heavyweights like Ambank (+11.0 sen) and Hong Leong Bank (+6.0 sen) traded higher, alongside BAT (+82.0 sen), Petronas Dagangan (+18.0 sen) and Westports (+4.0 sen).

• Asian equities continued its descent, on the back of unrelenting political uncertainties. The Nikkei inched lower as the losses in financials-related counters offset gains in energy stocks. The Hang Seng index lost 1.1%, with two-of-nine sectors in the red, while the Shanghai Composite index finished down by 0.4% despite rebounding from earlier losses. ASEAN stockmarkets closed broadly in the negative territory yesterday ? Wall Street traded lower as persistent political tensions between Washington and Pyongyang continued to depress market sentiments. The Dow retreated 0.9%, contributed by losses in Apple (-3.2%) as the giant mobile phone-maker face antitrust complaints lodged by Chinese phone app developers. On the broader market, the S&P 500 (-1.5%) and the Nasdaq (-2.1%) were also splashed in red.

• European equities continued to be downward pressured as investors retreated from the stockmarkets in return for safe-haven assets, following North Korea’s latest threat to release test missiles near Guam. The FTSE (-1.4%) slipped, weighed down by weaker-thanexpected monthly trade data and losses in mining stocks. The DAX was 1.2% lower, while the CAC shed 0.6% after France’s industrial production data underperformed analysts’ expectations.

The Day Ahead

• With global indices reeling from the heightened geopolitical concerns, equity market sentiments have turned weaker, which we expect to also permeate to the local stockmarket. Hence, we expect stocks on Bursa Malaysia to endure further downside bias as market players move to safer assets.

• Judging from yesterday’s pattern, however, the downside is likely to be cushioned by selective support from institutional players. Therefore, the FBM KLCI is set to find support at the 1,770 level, while the 1,780 points level remains the key market resistance.

• Elsewhere, we see the weak following persisting among the the lower liners and broader market shares amid the callous market environment that will see more retail players staying on the sidelines. ? Sentiments among the lower liners have been most affected of late given the lack of positive leads that has resulted in most players prefering to stay on the sidelines – a trend that is poised to sustain for longer.

Company Briefs

• Sunway Real Estate Investment Trust’s (REIT) 4QFY17 net property income (NPI) grew 9.3% Y.o.Y to RM98.5 mln, lifted by contributions from the retail and hotel segments and gradual improvement in the office segment. Revenue for the quarter expanded 7.2% Y.o.Y to RM132.5 mln.

• For FY17, cumulative net property income gained 4.0% Y.o.Y to RM388.8 mln. Revenue for the year improved 3.1% Y.o.Y to RM522.9 mln. A final income distribution of 2.3 sen per unit was declared. (The Star Online)

• Gas Malaysia Bhd's 2Q2017 net profit improved marginally by 1.3% Y.o.Y to RM39.5 mln as improvement driven by the increase in volume of gas sold and revisions in gas tariff was curbed by the higher cost of sales. Revenue for the quarter grew 32.2% Y.o.Y to RM1.29 bln.

• For 1H2017, cumulative net profit rose 4.1% Y.o.Y to RM73.2 mln. Revenue for the period increased 27.9% Y.o.Y to RM2.47 bln. (The Star Online)

• O&C Resources Bhd’s (OCR) 90.0%-owned subsidiary, O&C Properties (Kuantan) Sdn Bhd, is teaming up with the Pahang State Foundation to carry out a mixed development project in Penor, Pahang, with an estimated gross development value of RM166.0 mln.

• The 50:50 joint-venture project would include commercial development and an affordable housing scheme known as “Priya Scheme” on 100 ac. of the foundation’s 814 ac. leasehold land.

• The first phase of development under the project would be situated in Penor, near the Kuantan-Pekan district and about 20km from the Kuantan town. The intended project, to begin in 1H2018, will comprise 979 units of 20 ft x 70 ft terrace house, 18 units of semi-detached house measuring 40 ft x 90 ft, 112 units of semi-detached house spanning 40 ft x 80 ft and 41 shop lot offices. (The Star Online)

• Mlabs Systems Bhd has entered into a collaboration agreement with Thailand's Onliner Company Ltd to share and exploit IT technologies to develop new markets in Thailand and overseas.

• Under the collaboration, Onliner will design and set up free wifi and ecommerce services in Chatuchak Market, and will also develop a business model to generate revenue and earnings from the provision of services. MRL will commit a value of RM0.8 mln in IT support, which includes its multimedia video conferencing technology.

• Onliner will manage the day-to-day operations of the project, including funding, marketing and maintenance of the free wifi and e-commerce services, and is to deliver a 15.0% return p.a. in cash on the financial value contributed by MRL under the collaboration commitment for a minimum of two years, commencing from the date of the collaboration agreement. (The Edge Daily)

• Petronas Chemicals Group Bhd's 2Q2017 net profit jumped 108.7% Y.o.Y to RM964.0 mln on higher sales volume and average selling prices. Revenue for the quarter climbed 23.6% Y.o.Y to RM3.96 bln.

• For 1H2017, cumulative net profit surged 114.3% Y.o.Y to RM2.26 bln. Revenue for the period gained 36.3% Y.o.Y to RM8.65 bln. A dividend of 12 sen per share was proposed. (The Edge Daily)

• Bursa Malaysia issued an unusual market activity query on HCK Capital Group Bhd's share trade after the stock climbed as much as 30 sen to hit limit up on 10th August 2017.

• In response to Bursa Malaysia, HCK Capital is unaware of any reason for the spike in its share price today except for a couple of updates on corporate exercises. (The Edge Daily)

• SCGM Bhd has allocated RM133.0 mln in capital expenditure costs to build two new factories as part of its expansion plan. The factories are being built in the Klang Valley (operations expected to begin by year-end) and Kulai Johor (construction to be completed by end-2018).

• With the two factories fully operational, the company will have a total production capacity of 67.6 mln kg per year, up from its current 36.0 mln kg per year. (The Edge Daily)

• Key Alliance Group Bhd’s Managing Director, Datuk Goh Kian Seng has resigned from his position with effect from 10th August 2017. He is also its largest shareholder, with a 5.7% stake as at 19th June 2017. (The Edge Daily)

• Malaysia Airports Holdings Bhd (MAHB) has registered a 7.1% Y.o.Y growth in passengers at its network of airports, including Istanbul Sabiha Gokcen International Airport (Istanbul SGIA), to 11.4 mln in July 2017.  

Source: Mplus Research - 11 Aug 2017