Sentiments Turning Frail Again

• The FBM KLCI closed lower in a lackluster session, in-tandem with the weakness in regional stockmarkets and unabated selling pressure in Petronas-linked giants. The lower liners, however, finished mostly higher, with the exception of the FBM Small Cap (-0.2%). The broader market, meanwhile, ended broadly lower, with six out-of-the ten sub-sectors in red.

• Market breadth remains muted as losers beat winners on a ratio of 481-to-367 stocks. Traded volumes also declined 14.0% to 2.6 bln shares, weighed down by quick profit-taking activities.

• Energy stocks and Genting-related stocks that dominated the Main Board losers included Petronas Dagangan (-72.0 sen), Petronas Gas (-58.0 sen), Genting (-18.0 sen) and Genting Malaysia (-12.0 sen). Hong Leong Financial Group also fell 30.0 sen on Wednesday’s close. Broader market losers, meanwhile, were TAHPS (- 24.0 sen), Hong Leong Industries (-22.0 sen), Aeon Credit (-18.0 sen), SCGM (- 16.0 sen) and Bursa Malaysia (-13.0 sen).

• On the opposite side of the trade, F&B giants like Nestle (+50.0 sen) and Dutch Lady (+48.0 sen) rallied, followed by KESM (+70.0 sen), Hartalega (+30.0 sen) and Heineken Malaysia (+28.0 sen). Keyindex frontrunners were BAT (+RM1.20), Petronas Chemicals (+14.0 sen), Tenaga Nasional (+6.0 sen), Westports (+5.0 sen) and Ambank (+3.0 sen).

• Key regional equities were muted as investors stayed on the sidelines, following the lack of direction from U.S. stockmarkets overnight, coupled with mixed Chinese trade data. The Nikkei (- 0.1%) snapped a streak of four consecutive winning days, on the back of losses in financials and energy-related stock. The Hang Seng also fell 0.3%, partially weighed down by Tencent Holdings (-1.4%), on the back of mild profit-taking activities after its e-books unit surged 86.0% on its IPO debut in Hong Kong. The Shanghai Composite index, however, inched 0.1% higher while ASEAN bourses closed mixed.
• U.S. stockmarkets logged yet another fresh record close with incremental gains as investors anticipate more updates on President Donald Trump’s tax reform plans. The Dow crept forward, supported by gains in Merck & Co (+1.8%) and WalMart (+1.3%). On the broader market, the S&P 500 closed 0.1% higher, while the Nasdaq notched 0.3% gains, boosted by Apple after the iPhone maker sealed its position as the first public company to hit the market cap of US$900.0 bln.
• Earlier, European ended marginally lower, weighed down by banking and automakers. The FTSE (+0.2%) close in the positive territory – led by higherthan-expected quarterly earnings from Marks & Spencer. On the flip side, the DAX flatlined, while the CAC was lower by 0.2% to 5,471.4 points.

The Day Ahead

• It appears that the market is not prepared for a stronger recovery as selling-intostrength and quick profit taking tactics emerged yesterday to pull the key index back below the 1,750 level. This is again leaving the key index in a dour mode and the near term outlook has turned uncertain yet again and the insipid market conditions is set to sustain over the near term.

• With the key index failing to keep hold of the 1,750 level (which should remain the key near term resistance), further consolidation is on the cards that could send the key index back to the 1,740 level, which may prove to be a key support level as it has providing a firm support in the most recent consolidation.
• The lower liners and broader market shares could also see the mixed-to-lower market environment persisting amid the lack of new trading catalysts.

Company Brief

• Malaysian Pacific Industries Bhd’s (MPI) 1QFY18 net profit fell 8.7% Y.o.Y to RM36.2 mln due to higher material costs arising from the sales mix and higher commodity prices. Revenue for the quarter, however, rose 8.3% Y.o.Y to RM387.6 mln. (The Star Online)

• Wah Seong Corporation Bhd‘s unit, Wasco Coatings HK Ltd is counter suing Dutch company Bauhuis B.V. for US$20.6 mln (approximately RM87.0 mln) due to cost overruns and delays allegedly caused by the latter for a pipe-coating contract. The contract was to supply pipe-coating equipment to be installed and commissioned by Bauhuis at a pipe manufacturing plant in Regina, Canada. (The Star Online)

• Eco World International Bhd (EWI) plans to develop 12 sites in Greater London and the South East of England in partnership with U.K construction and interior fit-out firm, Wilmott Dixon. Apart from the acquisition of a 70.0% interest in the project sites, EWI will also be acquiring a 70.0% interest in Wilmott Dixon’s development management arm with full multi-disciplinary team of highly experienced personnel. This will provide the group with a strong pool of talent and manpower resources.

• The heads of agreement, which is still subject to EWI’s board approval, will potentially see the acquisition by EWI of 70.0% interest in Wilmott Dixon’s residential development business, held under Be Living. Subject to agreement on final terms, the proposed acquisition was expected to be formalised in December 2017 and had the potential to increase EWI’s total presence in the U.K. by fourfold by giving it access to a sizeable landbank of about 6,700 residential units with a total gross development value (GDV) of at least £2.50 bln (RM13.90 bln). (The Star Online)
• Tan Sri Robert Tan Hua Choon has resigned as Goh Ban Huat Bhd (GBH) group's Non-Independent and NonExecutive Chairman after selling a 51.0% stake of the company to Paragon Adventure Sdn Bhd. Tan, who has been Chairman of the ceramic and sanitary ware company since 2010, is relinquishing his position due to the change in the controlling shareholder. However, he still holds a 12.8% equity interest in the company and 24.8% of its outstanding warrants. (The Edge Daily)
• UEM Edgenta Bhd is claiming RM23.8 mln in damages from HartajayaBenteng Timur-AMR Jeli JV Sdn Bhd (HBT) in relation to two road construction and upgrading jobs.

• Between Aug 2009 and June 2010, HBT awarded two contracts to Edgenta Propel, comprising construction of a new expressway from Seremban-Port Dickson-FR5 and upgrading the road from FR5 from Pasir Panjang to Linggi, Negeri Sembilan. Edgenta Propel had decided to halt work under the contracts due to non-payment by HBT of the outstanding contracts sum of RM16.1 mln and RM6.41 mln respectively. (The Edge Daily)

Source: Mplus Research - 9 Nov 2017