• The FBM KLCI (-0.3%) continued to trend on a downward bias as investors digested a series of softer-than-expected Chinese data. The lower liners were also splashed in red, while the only the Finance (+0.1%) and the Plantations (+0.3%) sub-sectors managed to close higher on Thursday.

• Market breadth was muted as losers beat winners on a ratio of 492-to-397 stocks. Traded volumes further declined by 29.8% to 1.89 bln shares on extended profittaking activities amid weakness in the offshore markets.

• BAT (-68.0 sen), Hong Leong Financial Group (-26.0 sen), Genting (-20.0 sen), Kuala Lumpur Kepong (-12.0 sen) and PPB Group (-12.0 sen) weighed on the Main Board yesterday. On the broader market, Globetronics (-37.0 sen), Scientex (-34.0 sen) and Heineken Malaysia (-18.0 sen) finished lower, followed by plantations-related counters like United Plantations (-34.0 sen) and Chin Teck (- 20.0 sen).

• On the contrary, Far East Holdings (+40.0 sen), KESM Industries (+32.0 sen), Panasonic Manufacturing (+30.0 sen), Oriental Interest (+16.0 sen) and Negeri Sembilan Oil Palms (+15.0 sen) topped the broader market gainers’ list. UEM Edgenta also gained 14.0 sen following the proposed sale of its 61.2%-held stake in Opus International Consultants Ltd. Key-index outperformers were Ambank (+15.0 sen), Petronas Dagangan (+8.0 sen), Hap Seng (+4.0 sen), IHH Healthcare (+3.0 sen) and Maybank (+2.0 sen).

• Major Asian equities narrowed after China’s production and retail data missed analysts’ expectations. Sentiments also weakened as investors digested rising U.S. Treasury yields, following renewed optimisms on tax reforms in the U.S. The Nikkei closed 0.3% lower, although losses were slightly offset by extended gains in energy stocks. Similarly, the Hang Seng and the Shanghai Composite index also shed 0.4% each, alongside ASEAN stockmarkets which finished mostly lower.

• Stockmarkets in the U.S. retreated after notching back-to-back sessions of new highs, on rising expectations of a hike in interest rates in December following stronger-than-expected inflation data. The Dow ended up by 0.2%, although the S&P 500 and the Nasdaq finished down by 0.1% and 0.5% respectively, weighed down by mild profit-taking activities.

• Key European bourses closed on softer footing following a hawkish outlook from the Bank of England, despite holding rates steady on Thursday. The FTSE (- 1.1%) narrowed for the third-straight day, dragged down by an uptick in the Pound and losses in mining stocks, while the DAX slipped 0.1%. The CAC, however, opposed the general direction of the stockmarket and closed 0.2% higher

The Day Ahead

• As we noted yesterday, the 1,790 level is proving to be a difficult level for the key index to pass given that valuations are increasingly stretched and the lack of sustainable leads for market players to follow. This has resulted into many market players opting to lock-in the profits quickly and send the market to a consolidation mode.

• We think the consolidation spell could prolong as geopolitical concerns have risen again after North Korea fired another missile across Japan that could further undermine regional market sentiment. Hence, we see the FBM KLCI retreating back below the 1,780 level to retest the minor supports at 1,778 and 1,776 levels as the profit taking activities escalates.

• Interest on the lower liners and broader market shares have also waned and we expect the following to dwindle further over the near term as more retail players retreat to the sidelines ahead of the weekend.

Company Briefs

• TRC Synergy Bhd's joint venture with Konsortium Kontraktor Melayu (KKM) has secured a RM348.0mln contract for works on the Mass Rapid Transit Sungai BulohSerdang-Putrajaya (Line 2). The contract involves building the Serdang maintenance depot and external works. TRC, which is mainly involved in the construction business, aimed to raise the contribution ratio for construction and property segments to 80:20 from the current 90:10. (The Star Online)

• Sunway Construction Group Bhd (SunCon) has clinched a RM581.7 mln contract to build six 29-storey blocks of 1Malaysia Civil Servants Housing (PPA1M) apartments in Kota Baru, Kelantan. The 30-month project that would be completed by 1Q2020. With the latest project, its outstanding order book now stands at RM4.70 bln. (The Star Online)

• AbleGroup Bhd has received a conditional mandatory takeover offer from Parallel Pinnacle Sdn Bhd, the private vehicle of its Managing Director Datuk Lim Kim Huat, after the latter bought 28.3 mln AbleGroup shares or a 10.7% stake in the company. Parallel offered to buy the remaining shares at 13.0 sen per share, a 1.0 sen or 7.1% discount to the stock's closing price of 14.0 sen on 13th September 2017.

• The offer for the shares shall remain open for at least 21 days, albeit the offerors intend to maintain the listing status of AbleGroup on the Main Market of Bursa Malaysia. (The Edge Daily)

• Straits Inter Logistics Bhd’s have secured a half-year contract worth RM45.0 mln to provide oil bunkering and related services. The contract was awarded by Tumpuan Megah Development Sdn Bhd (TMD).

• The two parties had previously inked a collaboration agreement to explore and develop the business of bunkering services for marine fuel, petroleum and petroleum-based products including marketing and sales of bunkering services in the Pasir Gudang Port area of Johor. (The Edge Daily)

• Tenaga Nasional Bhd (TNB) announced that its 51.0%-owned Southern Power Generation Sdn Bhd plans to raise RM4.00 bln via a Sukuk issuance with a tenure of up to 20 years. The proceeds will be used by Southern Power Generation to fund up to 80.0% of the total construction cost of the two 720MW combined-cycle gas turbine power plant in Pasir Gudang, Johor, previously code-named Project 4A. (The Edge Daily)

• Astro Malaysia Holdings Bhd's 2QFY18 net profit jumped 96.4% Y.o.Y to RM246.3 mln, helped by lower finance costs on the back of favourable unrealised foreign exchange gains. Revenue for the quarter, however, fell marginally by 0.6% Y.o.Y to RM1.42 bln.

• For 1HFY18, cumulative net profit gained 35.0% Y.o.Y to RM442.2 mln. Revenue for the period, however, declined 1.6% Y.o.Y to RM2.75 bln. (The Edge Daily)

• Magni-Tech Industries Bhd's 1QFY18 net profit fell 16.7% Y.o.Y to RM19.6 mln, due to net foreign exchange loss recorded for the quarter. Revenue for the quarter, however, improved 8.2% Y.o.Y to RM293.7 mln. A single tier interim dividend of 3.5 sen per share was declared. (The Edge Daily)

• G3 Global Bhd has appointed its major shareholder, Puan Chan Cheong, the founder and current director of Green Packet Bhd, as its new Non-Executive Chairman. Puan is replacing Goh Kok Beng, who has been re-designated as Executive Director. (The Edge Daily)

• Bina Puri Holdings Bhd will undertake road pavement and diversion works along the Federal Road's Sungai BulohAssam Jawa stretch in Selangor, in a RM35.5 mln contract. (The Edge Daily)

• The Sultan of Johor, Sultan Ibrahim ibni Almarhum Sultan Iskandar, who emerged as the second largest individual shareholder in 7-Eleven Malaysia Holdings Bhd in August 2017 has bought an additional 874,100 shares between 7th September 2017 and 12th September 2017. This brings his total shareholding to 104.4 mln shares, equivalent to 9.4% in direct interest. (The Edge Daily)

• CB Industrial Product Holdings Bhd has secured a palm oil mill-related contract from Sime Darby Plantation Bhd. The RM8.8 mln contract entails replacing existing front-end vertical sterilizer with continuous sterilizer system at Sime Darby Plantation's palm oil mill in Layang Layang, Johor. (The Edge Daily)  

Source: Mplus Research - 15 Sept 2017