• The FBM KLCI closed in the negative territory for the third consecutive session, weighed down by bearish sentiments ahead of President Donald Trump’s tax bill release. The lower liners followed suit, led by the FBM Small Cap (- 0.2%), the FBM Ace (-0.2%) and the FBM Fledgling (-0.1%), while the majority of the broader market were painted in red.

• Market breadth was negative as losers beat winners on a ratio of 518-to-339 stocks. Traded volumes also shed 5.2% to 2.91 bln shares as investor sentiments turn cautious ahead of the unveiling of U.S.’s tax reform bill.

• Significant Main Board underperformers were energy giants like Petronas Dagangan (-20.0 sen), Petronas Gas (- 18.0 sen) and MISC (-8.0 sen), followed by BAT (-54.0 sen) and IHH Healthcare (- 8.0 sen). Broader market decliners, meanwhile, include Ajinomoto (-42.0 sen), Tasek (-28.0 sen), Litrak (-17.0 sen), Harrisons (-15.0 sen) and Shangri-La Hotels (-15.0 sen).

• On the flipside, Iskandar Waterfront City (+6.0 sen) and Ekovest (+4.0 sen) rebounded on bargain hunting activities, while other gainers include Palette (+4.0 sen) Berjaya Corporation (+2.5 sen) and AirAsia X (+1.5 sen). Banking heavyweights that dominated the winners’ list were Maybank (+5.0 sen), Hong Leong Bank (+4.0 sen), Hong Leong Financial Group (+4.0 sen) and CIMB (+2.0 sen). Kuala Lumpur Kepong also closed 6.0 sen higher at Thursday’s closing bell.

• Key regional benchmarked bourses narrowed as investors booked profits, ahead of the U.S. tax bill proposal. The Nikkei (+0.5%), however, bucked the general weakness in the stockmarkets and closed at a new 21-year record high, powered by gains in automakers and energy stocks. The Hang Seng shed 0.3%, weighed down by consumer staplesrelated counters, while the Shanghai Composite index closed 0.4% lower amid a similarly tepid environment in the ASEAN stockmarkets.

• Key U.S. benchmark indices were lacklustre as investors digested the newly released tax reform bill and the nomination of Fed Governor Jerome Powell as the next central bank’s Chairman. The Dow (+0.4%), however, logged a fresh record close after reversing earlier losses. Meanwhile, the S&P 500 and the Nasdaq finished the session almost unchanged.

• European equities finished mostly lower on Thursday, on the back of the weakness in exporters following a stronger Euro. The FTSE (+0.9%) ended at a three-week high as investors cheered the dovish outlook from the BoE, despite raising its interest rates for the first time in ten years. The CAC and the DAX, however, retreated 0.1% and 0.2% respectively.

The Day Ahead

• Sentiments on Bursa Malaysia remain on the cautious side amid the few available positive catalysts that is resulting in more stocks taking a dip after the recent Budget announcement provided few giveaways to corporates. As a result, market players are scouring for new leads elsewhere, but they remain elusive and resulting in the dour trend is returning.

• With sentiments remaining insipid, we see further near term downside with the key index poised for another stab at the 1,740 support level. If the level gives way, the key index could test the 1,730 support level in due course. Meanwhile, the 1,750 level is the main near term resistance.

• The lower liner and broader market shares may also see mixed trading environment persisting ahead of the weekend as retail players unwind some of their short-term positions.

Company Brief

• UEM Edgenta Bhd has received the nod from its shareholders to dispose of its 61.2% stake in New Zealand-listed Opus International Consultants Ltd (OIC) for RM528.0 mln, marking its exit from the region. The disposal would strengthen the group's balance sheet and allow the company to focus on organic growth.

• UEM Edgenta plans to utilise the bulk of the proceeds to pare down its debt from last year's acquisition. About RM415.2 mln of the proceeds will be used for repayment of borrowings and to significantly pare down UEM Edgenta's gearing to 0.2x from 0.6x. The remainder of the proceeds will be used for working capital and the disposal of asset expenses. The disposal is expected to be completed by the end 2017. (The Star Online)

• Trading in the shares of Ranhill Holdings Bhd has been halted from 11.19am to 2.30pm on 2nd November 2017 on the back of an announcement that its subsidiary Ranhill Water Technologies (Cayman) Ltd (RWTIC) has been served with a summons in China, claiming alleged unpaid fees amounting to RMB19.9 mln (about RM12.8 mln). Wahtoting was appointed by RWTC to source for a party to acquire the interest in RWHK and to form a strategic partnership with RWTC. Ranhill claims the agreement, dated 19th August 2014, was dependent upon key performance indicators being met by Wahtoting, which went unmet. (The Star Online)

• Hong Leong Financial Group Bhd (HFLG) has announced to Bursa Malaysia on 2nd November 2017 that it has launched a multi-currency perpetual notes programme and a commercial papers (CP) programme that would allow it to raise up to RM25.0 bln. The perpetual notes programme would involve the issuance of senior notes, Tier-2 subordinated notes (sub-notes), and additional Tier-1 capital securities of up to RM25.0 bln.

• Separately HLFG’s subsidiary Hong Leong Bank Bhd had set up a programme to issue multi-currency additional Tier-1 securities of up to RM10.0 bln in nominal value (AT1 programme). Proceeds from its AT1 programme would be used, without limitation, for on-lending to its subsidiaries, for investment into its subsidiaries, for working capital, general banking and other corporate purposes and/or if required, the refinancing of any existing financing obligations of the bank and/or any existing capital securities issued under the AT1 programme. (The Star Online)

• Sasbadi Holdings Bhd has inked a distribution agreement with Marshall Cavendish Education Pte Ltd (MCE), which is principally involved in providing K-12 educational solutions in Singapore. Under the agreement, MCE grants Sasbadi’s wholly-owned unit Malaysian Book Promotions Sdn Bhd the exclusive right to market and sell, including by way of direct marketing, certain titles published by MCE, in Malaysia. They include textbooks, workbooks, teacher resources, and supplementary and general materials. The agreement will take effect from 1st November 2017 and will last till 30th September 2020. (The Edge Daily) 
• ECS ICT Bhd’s 3Q2017 net profit dropped 20.5% Y.o.Y to RM4.9 mln, mainly due to lower margins and higher expenses. Revenue for the quarter, however, rose 2.1% Y.o.Y to RM446.2 mln.

• For 9M2017, cumulative net profit fell 16.2% Y.o.Y to RM14.7 mln. Revenue for the period, however, gained 6.4% Y.o.Y to RM1.35 bln. A single tier interim dividend of 2.5 sen per share, payable on 14th December 2017 was declared. (The Edge Daily)

• Kronologi Asia Bhd’s 3Q2017 net profit jumped 66.5% Y.o.Y to RM2.5 mln, mainly due to the full consolidation of Quantum Storage (India) Pte Ltd (QSI), which was previously a 20.0%-held associate. Revenue for the quarter increased 12.0% Y.o.Y to RM28.1 mln.

• For 9M2017, cumulative net profit surged 88.5% Y.o.Y to RM8.6 mln. Revenue for the period improved 88.2% Y.o.Y to RM101.6 mln. (The Edge Daily)

• Digi.Com Bhd has appointed online payment networks MOLPay Sdn Bhd and iPay88 Sdn Bhd as partners for its mobile payment service called "vcash". Vcash will be made available as a payment option for merchants under MOLPay and iPay88's online payment gateway networks, enabling customers to transact using vcash with thousands of merchants with online shopfronts nationwide. (The Edge Daily)

• Rev Asia Bhd’s largest shareholder, Catcha Group Pte Ltd has reduced its stake by another 4.5 mln shares to 59.5 mln shares or 44.2%, amid work on a proposal to acquire a new core business. The group has about eight months to submit its proposal, which it is still in the midst of formulating, to Bursa Malaysia Securities Bhd for approval. (The Edge Daily) 
• Luster Industries Bhd has entered into a joint venture agreement (JVA) to develop a 3.7 ha. piece of land in Hulu Langat into either a commercial, residential or mixed development. Its wholly-owned subsidiary Luster Hijauan Home Sdn Bhd entered into the JVA with Enrich Realty Sdn Bhd, which is also the owner of the said land, for the development. (The Edge Daily)

• Cuscapi Bhd has reported that the proceeds raised from a proposed issuance of new shares in the company will be reduced by one-third after the largest investor Ultimate Quality Success Sdn Bhd (UQS) expressed concern over the issuance of additional shares to the other three investors. Thus, the funds raised will now be RM53.2 mln, instead of RM79.8 mln. After engagement with UQS, Cuscapi held discussions with the other three investors who agreed to mutually terminate their respective subscription agreements with Cuscapi. (The Edge Daily)

• Trading in G Neptune Bhd shares will be suspended on 8th November 2017 if the IT-based company fails to submit its 2017 annual report by 7th November 2017. The group has failed to meet the 31st October 2017 deadline as it was finalising the audited financial statements for 30th June 2017. (The Edge Daily)

• Daya Materials Bhd has entered into a Memorandum of Understanding (MoU) with Huawei Technologies (M) Sdn Bhd for future project collaboration. Both parties intend to cooperate in the development of relevant infrastructure for joint submission of tender for any relevant information and communication technology projects, but no specifics were given. (The Edge Daily)    

Source: Mplus Research - 3 Nov 2017