• The FBM KLCI snapped a ten day losing streak to close higher on Tuesday, buoyed by bargain-hunting activities in selected heavyweights. The majority of the lower liners also rebounded – led by the FBM Ace (+0.8%). On the broader market, seven-of-ten sub-sectors rallied, although the Construction, Properties and Mining sub-sectors finishing lower.

• Market breadth remained muted as losers edged winners on a ratio of 410-to-405 stocks.Traded volume, meanwhile, declined marginally by 3.0% to 2.17 bln shares amid the lack of fresh trading catalysts.

• Hong Leong Financial Group (+30.0 sen), Kuala Lumpur Kepong (+18.0 sen), Petronas Gas (+18.0 sen), Genting Malaysia (+17.0 sen) and Ambank (+9.0 sen) propped the Main Board higher, while broader market gainers include Petron Malaysia (+58.0 sen), Dutch Lady (+56.0 sen), United Plantations (+48.0 sen), Magni-Tech (+35.0 sen) and Hong Leong Industries (+31.0 sen).

• On the opposite side of the trade, broader market underperformers include Kotra Industries (-13.0 sen), Ajinomoto (-8.0 sen) and Panasonic Manufacturing (-8.0 sen). Properties-related counters like Oriental Interest Bhd (-7.0 sen) and Country Heights (-6.0 sen) also weighed on the broader market on Tuesday’s close. The five decliners on Bursa Malaysia were PPB Group (-8.0 sen), Telekom (-5.0 sen), Astro (-3.0 sen), Westports (-3.0 sen) and MISC (-2.0 sen).

• Asian equities continued their upward momentum, despite the weakness in O&G stocks on expectations of upbeat global growth outlook moving forward. The Nikkei notched 1.1% - led by gains in real estate (+2.3%) and utilities-related (+1.8%) counters. The Hang Seng also gained 2.3% after China’s central bank lowered bank’s reserve requirements in a bid to boost lending to small businesses, albeit the Shanghai Composite index closed for the weeklong holidays. ASEAN stockmarkets were mostly higher on Tuesday.

• Major American equity benchmarks hit another new record high, amid strong U.S. data and expectations of higher interest rate in December. The Dow (+0.4%) minted its fifth-straight session of gains on follow through buyinginterest in American Express and WalMart. The S&P 500 also extended its gains for the sixth consecutive day, boosted by airline stocks, while the Nasdaq (+0.2%) closed at a new all-time high at 6,531.7 points.

• Key benchmark European stockmarkets also finished mostly higher, while the DAX was closed for a notional holiday. The FTSE gained 0.4%, albeit slightly offset by disappointing construction data which posted its first decline in more than a year. The CAC also rallied 0.3% - led by strong gains in retailers like Carrefour after Amazon reportedly approached several French supermarket operators.

The Day Ahead

• The recovery has been set in motion yesterday and we see further near term upsides as the rebound looks to continue from oversold. The 1,760 level should be cleared with ease and the key index is tipped to re-challenge the 1,765 level over the near term. In the meantime, the 1,750 remains the major support for now.

• While we see further near term recovery, fresh buying is still largely absent in light of the lack of new domestic catalyst. At the same time, the general market undertone is still on the cautious side, thus we think the recovery is likely to be muted and may be limited to the 1,770- 1,780 levels.

• The ongoing recovery among the key index constituents could also extend to the lower liners and broader market shares over the near term as retail players take advantage of the calmer market conditions to undertake trading activities. However, we also see hit-andrun strategies permeating among the lower liner shares, thus the upsides will also be limited, in our view.

Company Brief

• Mudajaya Group Bhd has clinched a RM118.6 mln contract to build the 16- storey Hevea Tower in Sungai Buloh, which is expected to be the Malaysian Rubber Board’s (MRB) corporate headquarters. The contract entails the building of an office complex with a three-storey podium. Hevea Tower is targeted to be completed by September 2019. (The Star Online)

• Cloudaron Group Bhd, after its successful debut on Bursa Malaysia’s LEAP Market on 3rd October 2017, will focus on mergers and acquisitions (M&As) to support its organic growth. The Singapore-based cloud solutions provider is the first LEAP-listed company. The company is now seeking to either build or acquire third party digital business platforms, which will double as a portfolio to attract more clients to use its services. (The Edge Daily)

• AirAsia Bhd’s Philippines AirAsia Inc (PAA) plans to raise up to US$250.0 mln from its initial public offering (IPO) that is targeted for listing by the middle of 2018. The funds raised would be used to expand its facilities, building hangars and an office building. At the same time, AirAsia is also planning to launch new flights from Manila to Indonesia in 1Q2018. (The Edge Daily)

• Al-Salam Real Estate Investment Trust (REIT) is planning to buy the Mydin hypermarket in Gong Badak, Terengganu for RM155.0 mln after inking a conditional SPA with Mydin Wholesale Cash and Carry Sdn Bhd for the acquisition.

• The acquisition will be fully funded via bank borrowings and/or debt financing to be secured by Al-Salam REIT and is expected to be completed in 1Q2018.

• The proposed buy is conditional upon execution of a leaseback agreement with Mydin Mohamed Holdings Bhd (MMHB) for the lease of the hypermarket for 30 years, on a triple net lease arrangement. On completion of the proposed acquisition, the property will be leased to MMHB for 30 years with a 5.0% rent increment every two years. (The Edge Daily)

• Felda Global Ventures Bhd (FGV) has announced its suspended Chief Financial Officer, Ahmad Tifli Mohd Talha will be returning to work on 4th October 2017, following his leave since 6th June 2017.

• The internal inquiry conducted since 24th July 2017 has found that neither FGV Chief Executive Officer and President Datuk Zakaria Arshad nor Ahmad Tifli was involved in alleged improprieties involving a client, Safitex Trading LLC, and FGV's subsidiary Delima Oil Products Sdn Bhd. (The Edge Daily)

• Wintoni Group Bhd has been ordered by The High Court of Malaya to be wound up, upon petition by a creditor of the ITbased company. Mohd Afrizan Husain had been appointed as the liquidator to wind up Wintoni. (The Edge Daily)  

Source: Mplus Research - 4 Oct 2017