• The FBM KLCI ended 0.1% higher yesterday after lingering mostly in the positive territory on the back of buyinginterest in major banks amid a more dovish outlook from the U.S. Federal Reserve. The FBM Small Cap (+0.7%) and the FBM Fledgling (+0.4%) also maintained its upward momentum, although the FBM Ace finished 0.2% lower. The broader market, meanwhile, also finished mostly in the green with nine-of-ten sub-sectors notching gains on Thursday.

• Market breadth was positive with 494 advancers against 332 decliners, while traded volumes rose by 4.9% to 1.80 bln shares, buoyed by higher risk appetite as geopolitical concerns begin to abate.

• Banking heavyweights which dominated the Main Board gainers’ list include Hong Leong Financial Group (+8.0 sen), Ambank (+7.0 sen) and Hong Leong Bank (+6.0 sen), followed by Genting Malaysia (+12.0 sen) and Petronas Chemicals (+12.0 sen). Other notable advancers were Hengyuan Refining (+62.0 sen), Chin Teck Plantations (+44.0 sen), Lotte Chemical (+38.0 sen), Petron Malaysia (+32.0 sen) and Vitrox (+25.0 sen).

• On the other side of the trade, United U-li Corporation (-20.0 sen), United Plantations (-20.0 sen), Sig Gases (-17.0 sen), Genting Plantations (-12.0 sen) and JCBNext (-9.0 sen) weighed on the broader market. Significant decliners on Bursa Malaysia were Petronas Gas (-22.0 sen), Kuala Lumpur Kepong (-20.0 sen), PPB Group (-12.0 sen), KLCC (-8.0 sen) and Astro (-5.0 sen).

• Major regional stockmarkets contracted, weighed down by political turbulence in the U.S. after President Donald Trump unexpectedly disbanded two advisory councils, following the resignation of several prominent business executives. The Nikkei extended its losses for the second consecutive session, dragged down by the weakness in financial-related stocks. The Hang Seng index also weakened by 0.2%, albeit slightly offset by gains in Tencent due to upbeat 2Q2017 earnings. The Shanghai Composite index bucked the general bearish mood to finish 0.7% higher, while ASEAN stockmarkets also ended mostly positively on Thursday.

• U.S. equities suffered its biggest selldown in three months as sentiments turned bearish following a terrorist attack in Barcelona, coupled with rising political turmoil within the White House. The Dow (- 1.2%) fell below the 22,000 psychological mark on the back of losses in Cisco (-4.0%) and Apple (-1.9%). On the broader market, the S&P 500 was down by 1.5%, with all of its nine sectors in the red, while the Nasdaq also declined by 1.9%.

• European equities finished Thursday’s session lower, dragged down by losses in major banking stocks and mixed messages from the U.S. Federal Reserve’s meeting minutes. The FTSE and the CAC slipped into the negative territory after shedding 0.6% each, while the DAX lost 0.5% - led by the weakness in Deutsche Bank and its rival Commerzbank.

The Day Ahead

• The FBM KLCI’s recovery could become undone over the near term after global stockmarkets took a dip overnight as fresh political concerns emerge in the U.S. and new terror attacks in Europe. Sentiments are likely to become increasingly wary ahead of the weekend and market players could hasten their profit taking activities that could also leave the Malaysian stockmarket on the wayside.
   
• We think the FBM KLCI could retrace back to the 1,770-1,773 levels with institutional players providing some measure of support that could also relieve some of the downside pressure.

• Elsewhere, the lower liners and broader market shares are also likely to seccumb fresh selling as retail players will opt to lock-in their near term profits ahead of the weekend.

Company Briefs

• Pos Malaysia Bhd’s 1QFY18 net profit rose 19.1% Y.o.Y to RM37.9 mln due to the inclusion of the newly acquired logistics business and the strong growth in its courier business. Revenue for the quarter grew 47.1% Y.o.Y to RM611.6 mln. (The Star Online)

• Carlsberg Brewery Malaysia Bhd’s 2Q2017 net profit climbed 18.6% Y.o.Y to RM60.9 mln, helped by a strong performance of its premium brands, coupled with a one-off trade discount adjustment in its Singapore-based operations. Revenue for the quarter improved 4.1% Y.o.Y to RM412.1 mln.

• For 1H2017, cumulative net profit increased 12.2% Y.o.Y to RM128.3 mln. Revenue for the quarter rose 7.4% Y.o.Y to RM914.8 mln. (The Star Online)

• Hong Leong Industries Bhd (HLI) swung to a loss of RM104.6 mln in 4QFY17 vs. a net profit of RM69.5 mln recorded in the previous corresponding quarter due to an impairment provision of RM172.0 mln for its investment in Malaysian Newsprint Industries Sdn Bhd (MNI). Revenue for the quarter declined marginally by 0.1% Y.o.Y to RM569.0 mln.

• For FY17, cumulative net profit sank 58.0% Y.o.Y to RM103.1 mln. Revenue for the year, however, grew 3.9% Y.o.Y to RM2.28 bln. (The Star Online)

• Notion VTec Bhd’s 3QFY17 net profit stood at RM2.8 mln vs. a net loss of RM5.5 mln recorded in the previous corresponding quarter, mainly lifted by an income tax gain coupled with higher sales. Revenue for the quarter rose 27.6% Y.o.Y to RM67.8 mln.

• For 9MFY17, cumulative net profit improved 73.6% Y.o.Y to RM10.9 mln. Revenue for the period expanded 16.1% Y.o.Y to RM136.6 mln. A third interim dividend of 0.75 sen per share was declared. (The Edge Daily)

• Kerjaya Prospek Group Bhd has bagged a contract worth RM442.0 mln for the main building works of a proposed development project from Aspen Vision City Sdn Bhd, a joint venture company of Aspen Group and IKEA Southeast. The project known as Vertu Resort is the first high-rise urban resort-inspired residential development in Aspen Vision City in Penang.

• It will feature a host of resort style facilities and amenities across 200,000 sq. ft. of space. It is the biggest project award 2017, boosting outstanding orderbook to RM2.90 bln. (The Edge Daily)

• Allianz Malaysia Bhd’s 2Q2017 net profit declined 12.9% Y.o.Y to RM66.5 mln mainly due to higher expenses. Revenue for the quarter, however, rose 3.5% Y.o.Y to RM1.19 bln.

• For 1H2017, cumulative net profit fell 10.6% Y.o.Y to RM133.7 mln. Revenue for the period, however, increased 3.4% Y.o.Y to RM2.40 bln. (The Edge Daily)  

Source: Mplus Research - 18 Aug 2017