Window Dressing To Hold Market Up

• The FBM KLCI inched into the red, despite recovering from earlier sharp losses - led by selling-pressure in selected heavyweights and a weaker Ringgit. The lower liners were also painted red, with the exception of the FBM Small Cap Index (+0.1%). Meanwhile, the broader market traded mostly lower, led by the Mining (- 1.4%) and Technology (-0.5%) subsectors.

• Market breadth was lackluster as decliners beat advancers on a ratio of 489-to-387 stocks, while 379 counters flat-lined. Traded volumes, however, jumped 26.3% to 2.07 bln shares, on window dressing activities amid the yearend portfolio rebalancing.

• Key-index laggards include Nestle (- RM2.00), Telekom Malaysia (-25.0 sen), Genting (-10.0 sen), Petronas Gas (-10.0 sen) and KLCC (-5.0 sen). Other underperformers were broader market constituents – Dutch Lady (-60.0 sen), Ajinomoto (-46.0 sen), BAT (-36.0 sen), Genting Plantations (-20.0 sen) and Globetronics (-15.0 sen).

• On the opposite of the trade, notable broader market gainers were Hengyuan Refining (+96.0 sen), Panasonic Manufacturing (+52.0 sen), Fraser & Neave (+32.0 sen) and Allianz (+26.0 sen), while Kim Loong rose 26.0 sen after reporting higher-than-expected 3QFY18 quarterly results. Large cap stocks like PPB Group (+68.0 sen), Kuala Lumpur Kepong (+16.0 sen), MISC (+14.0 sen), Sime Darby (+10.0 sen) and Astro (+3.0 sen) also bucked the general negative sentiment and closed higher on Tuesday’s closing bell.

• Chinese stocks gained momentum, lifted by gains in financial and real estaterelated stocks as investors await the latest industrial profits data. The Shanghai Composite jumped 0.8%, while the Nikkei shed 0.2% on mild profittaking. The Hang Seng Index remained closed for public holidays, while ASEAN equities tracked higher.
• U.S. stockmarkets lingered in the red, dampened by the weakness Apple Inc (- 2.5%), following concerns on lower-thanexpected demand for its signature IPhone X. The Dow was flattish despite postholiday gains in retailers, on the back of upbeat holiday-boosted sales report. Meanwhile, tech-heavy indices like the S&P 500 (-0.1%) and the Nasdaq (-0.3%) declined.
• Major European indices were closed for Boxing Day public holiday.

The Day Ahead

• The market’s window dressing activities took a pause yesterday, but there were sustained institutional efforts to ensure that the key index remained on an even keel amid the slight market weakness where the key index managed to recoup most of its intraday losses.

• Therefore, we think that the window dressing activities are still in the works, with potentially more near term upsides over the next three days before the end of the year. We maintain our view that the key index could now end the year at the 1,770 and 1,780 levels, while the 1,750 level is still the key support for now.

• Despite the sustained window dressing activities, the lower liners and broader market shares may still endure a choppy environment amid the lack of followings as most retail players are still on the sidelines thare on their holidays as with fewer leads for the retail players to follow. Therefore, we also see market depth remaining on dull side until the start of the year.

Company Briefs

• Malaysian Resources Corp Bhd (MRCB) has roped in the property arm of Lembaga Tabung Haji to take up a majority stake in a mixed development project in Setapak, Kuala Lumpur. Under the deal, MRCB will sell a 70.0% stake in 59INC Sdn Bhd to TH Properties Sdn Bhd for RM100.0 mln. 59INC owns three parcels of land in Setapak measuring 111,195 sq.m.
• The net book value of the land stood at RM113.0 mln, while the market value of the land is estimated at RM270.0 mln, based on a valuation by Raine & Horne dated 17th August 2017. The development will include apartment blocks, a shopping centre, car parks, shop offices and the other facilities. It will be carried out in the three phases. (The Star Online)

• Pensonic Holdings Bhd has bought two adjacent pieces of land in Klang as it seeks to expand its warehousing and office operations to cater to the southern and central regions as well as its export markets. The freehold lands, spanning a total of 25,127 sq.m at Taman Perindustrian Worldwide Kapas Bestari, were purchased from Worldwide Holdings Bhd’s subsidiary Cekal Unggul Sdn Bhd for RM20.1 mln.

• Pensonic plans to build a new warehouse and office block that would lead to savings on warehouse rental cost and allow it to consolidate operations in one location. The purchase price was arrived at on a willing-buyer willing-seller basis after considering the selling price for lots on the Taman Perindustrian Worldwide Kapas Bestari development, where interested purchasers have bought at about RM74.00 psf. The purchase would be satisfied through internally generated funds and bank borrowings. (The Star Online)
• Sona Petroleum Bhd has yet to receive the tax clearance for the final distribution of the remaining cash in its cash trust account amounting to 1.39 sen per share to shareholders. It however has reported that tax returns for the year of assessment 2017 have been filed with the Inland Revenue Board (IRB). Sona had immediately sought for tax clearance, adding that the liquidation of subsidiary Sona E&O (Perth) Pty Ltd should completed by this month. (The Edge Daily)
• Tenaga Nasional Bhd (TNB) has reported that the Malaysian government’s decision to provide RM929.4 mln or 1.80sen/kWh rebate under the current Imbalance Cost Pass Through (ICPT) for electricity customers from 1st January 2018 to 30th June 2018 as neutral on the utility giant’s business operations and financial position. The government has also agreed to maintain existing electricity tariff rates, which has been in place since 1st January 2014, unchanged until 31st December 2020. (The Edge Daily)

• Hibiscus Petroleum Bhd, which is acquiring 50% stake in the 2011 North Sabah EOR Production Sharing Contract (PSC) from Shell Sabah Selatan Sdn Bhd for US$25.0 mln, has announced that both parties have clarified and agreed on the conditions set by Petronas for the deal. On 22nd December 2017, the parties had entered into a novation agreement so it can continue production and further develop the resources upon completion of the acquisition, which it expects to be completed by 31st March 2018. (The Edge Daily)

Source: Mplus Research - 27 Dec 2017