• The FBM KLCI (-0.2%) started off the week on a dour note as the key index bucked the positive sentiment across key regional indices. Nevertheless, the key index managed to recoup some of its intraday losses after lingering mostly in the negative territory yesterday. The lower liners – the FBM Small Cap (+0.3%), FBM Fledgling (+0.1%) and FBM ACE (+0.1%), however, all advanced, while the broader market closed mixed.

• Market breadth remained negative as losers outstripped gainers on a ratio of 457-to-406 stocks. Traded volumes declined 7.2% to 1.99 bln shares amid the lack of fresh local catalyst.

• More than half of the key index components retreated, led by Petronas Gas (-24.0 sen), followed by Hong Leong Financial Group (-12.0 sen), Genting Malaysia (-12.0 sen), IHH (-11.0 sen) and Hong Leong Bank (-8.0 sen). Panasonic (- RM1.92), while other significant losers of the broader market were KESM Industries (-32.0 sen), Time dotCom (-29.0 sen), Carlsberg (-26.0 sen) and Dutch Lady (- 18.0 sen).

• In contrast, Petron Malaysia (+40.0 sen), United Plantations (+40.0 sen), Ajinomoto (+30.0 sen) and Chin Teck Plantations (+20.0 sen) topped the broader market advancers list. Berjaya Food gained 4.0 sen after reporting a strong set of quarterly earnings. Key winners on the FBM KLCI include BAT (+18.0 sen), Maybank (+10.0 sen), Public Bank (+4.0 sen), Petronas Dagangan (+4.0 sen) and Tenaga (+2.0 sen).

• Asia stockmarkets advanced yesterday, taking cue from the positive developments in Wall Street. The Nikkei (+0.5%) extended its gains to close at its one-month high, buoyed by the resilience in U.S. Dollar against the Japanese Yen. The Shanghai Composite added 0.3%, while the Hang Seng Index surged 1.3% to close above the 28,000 psychological level on gains in property shares. ASEAN stockmarkets, meanwhile, finished mostly higher.

• Wall Street advanced overnight as the Dow rose ahead of the two-day U.S. Federal Reserve meeting with investors expecting interest rates to remain unchanged as more details of the unwinding of the US$4.5 trl balance sheet are awaited. On the broader market S&P 500 gained 0.2% on gains in the financial sector (+1.0%).

• European benchmark indices – the FTSE (+0.5%), CAC (+0.3%) and DAX (+0.3%), all staged a recovery after the geopolitical tension in North Korea cooled. Gains were also supported by Portugal’s return to an investment grade rating after being upgraded by credit rating agencies after more than five years.

The Day Ahead

• After springing past the 1,780 level, the FBM KLCI is seemingly finding it difficult to past the next resistance level at the 1,790 level as the buying momentum is still relatively weak to support the key index at higher levels. As it is, corporate earnings performance remained subdued in the latest results reporting season, hence not providing the necessary catalyst for the market to stay elevated.

• Still, we think there is further near term upsides as trading activities will continue to dominate trades after yesterday’s mild consolidation. We see stocks playing catch up to the positive performances in key global markets and to make another pass at the 1,790 level again, albeit we continue to think it remains a formidable hurdle for the key index to clear in view of the lack of sustainable market leads.

• We also think that trading activities could also prevail among the lower liners and broader market shares, but their gains will also be punctuated by quick profit taking activities with retail players locking-in their profits early in the holiday shorten week.

Company Briefs

• Affin Holdings Bhd has secured the approval of Bank Negara Malaysia (BNM) to acquire about 8.4 mln shares (or 7.1%) equity stake in AXA Affin General Insurance Bhd for RM99.1 mln cash from Felda Global Ventures Holdings Bhd. Consequently, the group’s shareholding in AXA Affin will rise to 44.1%, from 37.1% previously. (The Star Online)

• T7 Global Bhd’s investment in Triangle Energy Global Ltd has paid off after it struck oil in the coastal Xanadu-1 well in the Perth Basin. To recap, the group acquired a 9.8% shareholding in the Australian-listed oil and gas exploration and production firm for US$500,000 (or RM2.1 mln) in June this year.

• Separately, T7 Global has also secured two contracts worth RM7.2 mln from Petroliam Nasional Bhd (Petronas) and the MMC-Gamuda KVMRT (UGW) jointventure (JV). The first contract, which is slated to commence from August 2017 to December 2018, with a one-year option, was awarded by Petronas' unit PRPC Utilities and Facilities Sdn Bhd for RM5.0 mln.

• Meanwhile, the second contract, worth RM2.2 mln is related to the MRT Line 2 and includes the refurbishment to reuse the existing steel storage tanks and the supply of new steel storage tanks and its associated works at the Chan Sow Lin and Bandar Malaysia North MRT launching site. (The Star Online)

• Salcon Bhd was awarded a RM13.3 mln contract from Pengurusan Air Selangor Sdn Bhd to replace the pipes in the Klang Valley area, covering Klang, Sabak Bernam, Kuala Selangor and Petaling Jaya. The 15-month project will begin in early October, with an additional 18 months of defect liability period. (The Star Online)

• Kerjaya Prospek Group Bhd has bagged a contract worth RM291.0 mln for construction works related to a proposed residential development project known as "The Estate", located in Bangsar. The latest contract win brings Kerjaya’s total outstanding orderbook to RM3.15 bln. (The Edge Daily)

• Jaycorp Bhd has clinched a RM12.6 mln contract to build the one-storey Azman Hashim Gallery and Auditorium at Universiti Malaysia Sabah (UMS) in Kota Kinabalu, via a public tender by Amcorp Group Bhd. The project is slated for completion within 78 weeks from the date of site possession. (The Edge Daily)

• Matrix Concepts Holdings Bhd is collaborating with a local firm affiliated with a Chinese education group in Hebei, China, to boost the enrolment of Chinese students at its international school in Negeri Sembilan.

• To effect in the partnership, the group’s unit Matrix Global Education Sdn Bhd inked an education joint collaboration agreement with Hengshui Yizhong Education Group Sdn Bhd, an affiliated company with Hengshui No 1 High School in Hebei, China. (The Edge Daily)  

Source: Mplus Research - 19 Sept 2017