• The FBM KLCI (+1.0%) saw further gains ahead of the New Year holiday, lifted by buying-support in the eleventh hour. The key-index also closed firmly in the positive territory (+2.1% W.o.W), amid year-end portfolio rebalancing activities and stronger commodity prices. All the lower liners - the FBM Fledgling (+0.3%), the FBM Small Cap (+0.5%) and the FBM Ace (+0.3%) advanced, amid a mostly green broader market.

• Market breadth remains positive as winners beat losers on a ratio of 489-to- 468 stocks, while 389 stocks finished unchanged. Traded volumes also jumped 18.8% to 3.14 bln shares, amid the yearend portfolio rebalancing and buyinginterest in O&G stocks.

• Significant key-index movers include plantations heavyweights like Sime Plantations (+52.0 sen) and Kuala Lumpur Kepong (+34.0 sen), followed by Nestle (+RM2.10), KLCC (+83.0. sen) and Digi (+26.0 sen). Consumer products giant like Dutch Lady (+RM2.20) and Fraser & Neave (+46.0 sen), followed by BAT (+RM2.00), SP Setia (+64.0 sen) and Capitaland Malaysia Mall Trust (+41.0 sen).

• On the other side of the trade, refiners like Hengyuan Refining (-RM1.66) and Petron Malaysia (-RM1.06) pulled the broader market lower. Other laggards, meanwhile, include Batu Kawan (-28.0 sen), Allianz Malaysia (-24.0 sen) and Hartalega (-14.0 sen). Top five losers on the Main Board were Tenaga Nasional (- 16.0 sen) Petronas Chemicals (-10.0 sen), Genting (-5.0 sen), IHH Healthcare (-4.0 sen) and Public Bank (-4.0 sen).

• Key regional benchmark stockmarkets closed mostly higher, with the exception of the Nikkei (-0.1%), which extended its losses for the second-straight day – led by continued weakness in the Greenback. On the positive side, the Shanghai Composite notched 0.3%, while the Hang Seng Index gain 0.2%, on the back of gains in Geely Automobile (+1.9%) after announcing its plans to acquire AB Volvo for US$3.2 bln. Most ASEAN stockmarkets also rallied on the last trading day of the year.

• Wall Street retreated, weighed down by profit-taking activities on the last trading day of the year, despite hitting a series of record highs in 2017. The Dow closed 0.5% lower - led by losses in Apple (- 1.1%), following a scandal relating to its IPhone battery issue. Meanwhile, both the S&P 500 (-0.5%) and the Nasdaq (- 0.7%) also closed lower on Friday.

• Major key European equities closed on a downward bias, dented by political uncertainties. The FTSE (+0.9%) ended the year on a fresh new high, however, lifted by miners. The CAC shed 0.5% following the dissolution of the Italian Parliament ahead of general elections in March 2018, alongside the DAX (-0.5%).

The Day Ahead

• After ending the year in a flourish, the FBM KLCI is poised to start the year with some hesitation as we see mild profit taking activities setting in at the start of trading in the new year. The sharp gains toward the end of the last year are seen as overdone and have left the market in an overbought condition. Therefore, we expect the market to take a breather to allow some of the gains to be digested.

• We see the consolidation spell taking the key index back to around the 1,780 levels, an area that we see ample support for the market, while below that there is further support at the 1,750 level. The 1,800 points level is the near term resistance, but we think the level may be difficult to breach over the near term as the market already attained significant gains over the past week.

• There should be increased retail participation as the holiday season has ended. Still, with few leads available we think fresh buying will be selective and gains could also be limited.

Company Briefs

• The Inland Revenue Board (IRB) has directed MMC Corp Bhd to pay RM45.9 mln as additional income tax and penalties for the years of assessment 2011 to 2013. The assessment from IRB is on interest expenses relating to certain investments that did not qualify for tax deduction under Section 33 of the Income Tax Act, 1967. (The Star Online)

• Advancecon Holdings Bhd has bagged a RM45.8 mln contract to provide earthworks and ancillary works for a development on a piece of 439 ac. land in Ijok, Selangor. The contract, awarded by Worldwide Property Management Sdn Bhd spans 18 months from 15th January 2018 to 14th July 2019. (The Edge Daily)

• AirAsia Bhd has completed the listing of its Indonesian arm, Indonesia AirAsia (IAA) following PT AirAsia Indonesia Tbk’s (AAID) acquisition of a 57.3% stake in IAA.

• Separately, AirAsia group chief executive Tan Sri Tony Fernandes has reiterated that the low-cost carrier's plan to combine all its airline businesses under one listed vehicle, with its operations in the Philippines next in the growth pipeline after AirAsia Indonesia. (The Edge Daily)

• Entrepreneur Datuk Fakhri Yassin Mahiaddin will relinquish his board position as Non-Independent and NonExecutive Director of Eden Inc Bhd on 31st December 2017. He resigned to focus on other business commitments. (The Edge Daily)

• The Malaysia Competition Commission (MyCC) revealed it penalised MY E.G. Services Bhd (MyEG) for infringing the Competition Act 2010 because MyEG had imposed additional steps to customers that want to purchase mandatory insurances for the renewal of temporary employment permits for foreign workers (PLKS) without going through its agent, RHB Insurance Bhd.

• MyEG’s penalties totalled RM6.1 mln — with risks of increase if the e-services group does not adhere to instruction to immediately stop the practice, and provide an efficient gateway for competitors to provide the services within 60 days beginning 28th December 2017. (The Edge Daily)    

Source: Mplus Research - 2 Jan 2018