• The FBM KLCI (-0.2%) edged lower to close at the lowest level since April 2017 as the key index recorded its fourth consecutive day of losses last Friday, after trading mostly in the negative territory. Consequently, the key index fell 0.8% W.o.W. The lower liners, however, ended mostly higher as both the FBM Small Cap and FBM Fledgling added 0.3% each, while the Industrial Products (+0.2%), Construction (+0.4%) and Plantations (+0.1%) outperformed the negative broader market.

• Market breadth was indifferent with both gainers and losers at 437 stocks each. Traded volumes fell 17.2% to 2.62 bln shares amid the lack of fresh local catalysts.

• Genting (-20.0 sen) topped the big board decliners list, followed by PPB Group (- 18.0 sen), AmBank (-11.0 sen), Petronas Gas (-10.0 sen) and Maybank (-6.0 sen). Amongst the biggest decliners on the broader market include Dutch Lady (- RM3.48), Chin Teck Plantations (-34.0 sen), Time dotcom (-30.0 sen) and Nestle (-28.0 sen). Notion Vtec sank 26.0 sen after a fire broke out at its main factory in Klang.

• On the flipside, IQ Group (+39.0 sen), Genting Plantations (+32.0 sen), Heineken (+32.0 sen), Comintel Corporation (+30.0 sen) and Tasek Corporation (+20.0 sen) anchored the advancers list on the broader market. Key winners on the big board were Hong Leong Financial Group (+18.0 sen), KLK (+8.0 sen), DIGI (+5.0 sen), IJM (+4.0 sen) and Telekom (+3.0 sen).

• Asian benchmark indices closed mostly higher last Friday as the Nikkei added 0.04% ahead of the weekend’s general election. The Hang Seng Index (+1.2%) recovered most of its previous session selloff, while the Shanghai Composite gained 0.3% as investors continue to digest the recent report of the country’s GDP. ASEAN stockmarkets, meanwhile, ended mostly higher.

• Wall Street climbed higher as the Dow added 0.7% to close at a fresh record high level, buoyed by the potential implementation of tax cuts. On the broader market, the S&P 500 gained 0.5% after the financial sector (+1.2%) rallied, while the Nasdaq finished 0.4% higher.

• Earlier, European benchmark indices closed marginally higher as the CAC and DAX added 0.1% and 0.01% respectively as gains were limited due to escalation of political tensions in Spain. The FTSE managed to chalk in 0.19 pts gains after erasing most of its intraday gains.

The Day Ahead

• The FBM KLCI continues to find it difficult to stage a recovery despite slipping nearly 3.0% from the 1,790 level a month ago. As it is, there appears to be little support for the key index to follow the trend of overseas indices to head higher as the selling on the index heavyweights, particularly from foreign funds, remains intact for now.

• This means that the downside mode is still in play and the key index could head further down – potentially to the next support at the 1,730 level. Still, the key index is already oversold and a rebound is due, but any recovery at this juncture is likely to be merely an adjustment from oversold. The potential recovery could lead the key index back to the 1,750 level.

• The lower liners and broader market shares are expected to fare better with rotational interest still prevalent, thereby helping to sustain the above average trading volumes and provide a bright spot in an otherwise morbid market condition.

Company Brief

• Comintel Corp Bhd will be disposing its electronic manufacturing services unit, BCM Electronics Corp Sdn Bhd, for RM123.8 mln to Aurelius Holdings Sdn Bhd, which is 50.0%-owned by Comintel Executive Director Loh Hock Chiang.

• Consequently, the group is expected to realise a one-off gain of about RM76.3 mln from the proposed sale (including RM11.5 mln owed to BCM), based on its FY17 audited consolidated financial statements. (The Edge Daily)

• Ranhill Holdings Bhd was awarded a project worth 152.6 mln baht (RM19.3 mln) to build, operate and transfer a water treatment plant at Rayong province in Thailand, from Amata Water Co Ltd.

• The seven mln litres per day (MLD) water treatment plant development project will have an operations and maintenance period of 19 years, on top of a one-year construction period. (The Edge Daily)

• Nova MSC Bhd is proposing to undertake a private placement of up to 88.8 mln new shares (or 10.0% of its issued share capital) to raise between RM6.2 mln and RM8.0 mln to fund its projects. The group’s projects tenderbook stood at approximately RM80.0 mln as at 19th October 2017, comprising mainly projects from government agencies such as Singapore's Urban Redevelopment Authority. (The Edge Daily)

• Syarikat Takaful Malaysia Bhd’s 3Q2017 net profit rose 8.3% Y.o.Y to RM48.6 mln compared to RM44.9 mln a year ago, lifted by higher net wakalah fee income and lower management expenses, while revenue was 11.5% Y.o.Y higher at RM476.2 mln, from RM427.0 mln in the same period last year.

• Cumulative 9M2017 net profit also increased 9.8% Y.o.Y to RM150.4 mln, from RM137.0 mln a year ago, intandem with a 7.0% Y.o.Y growth in revenue to RM1.62 bln, from RM1.52 bln in 9M2016. (The Star Online)

• Icon Offshore Bhd has announced the resignation of its Managing Director (MD), Amir Hamzah Azizan as of 30th November 2017 after less than two years at the helm, as he moves to Khanazah National Bhd’s unit, Themed Attractions Resorts & Hotel Sdn Bhd.

• Consequently, its Chief Operating Officer Hassan Ali will serve as acting MD for the next few months, until a suitable successor is found. (The Star Online)

• MyEG Services Bhd’s Executive Chairman, Datuk Norraesah Mohamad has emerged as a substantial shareholder with 29.7% indirect interest in the company through Asia Internet Holdings Sdn Bhd.

• The group’s shareholding – held by Asia Internet Holdings were previously owned by MyEG’s executive director Datuk Raja Munir Raja Mustapha. Following the news, Datuk Raja Munir has ceased to be a substantial shareholder of MyEG. (The Edge Daily)

• Notion VTec Bhd has announced that a fire incident broke out at its main manufacturing plant in Klang on 20th October 2017, affecting its units - Kaiten Precision Sdn Bhd, Notion Venture Sdn Bhd, and Autic Mekki Sdn Bhd. Notion has assured that it is adequately covered by insurance, although the full financial and operational impact, as well as consequences of the incident will be announced later. (The Star Online)

• SCH Group Bhd has halted its plan to diversify into the downstream quarry operation by selling deposits from three flood mitigation ponds in Kuala Lumpur. Consequently, the group has decided not to enter into any definitive agreements with Sewara Engineering Sdn Bhd, Stigma Impiana Sdn Bhd and Dataran 888 Sdn Bhd, and notices of the termination of the Memoranda of Understanding (MoUs) would be served to the respective parties accordingly.

• To recap, SCH had signed MoUs on the 17th May 2017 with the three companies for exclusive collaboration on the excavation and removal, and subsequent distribution and sale, of the deposits from the Bohol, Nanyang and Permaisuri retention ponds. (The Star Online)  

Source: Mplus Research - 23 Oct 2017