A Quick Rebound In Sight

• The FBM KLCI (-0.8%) lingered in the negative territory for the entire trading session, dragged down by profit-taking activities in selected heavyweights. All the lower liners, however, finished higher – led by the FBM Ace (+1.6%). The broader market was painted red, with the exception of the Industrial Products (+0.9%), Technology (+0.6%) and Plantations (+0.1%) indices, while the Mining sub-sector closed unchanged.

• Market breadth was positive as advancers outweighed underperformers on a ratio of 530-to-490 stocks, while 327 stocks flatlined. Traded volumes also rose 17.8% to 3.70 bln shares on the back of buying-interest in the lower liners.

• Nestle (-RM2.10), KLCC (-73.0 sen), Sime Darby Plantation (-51.0 sen), Kuala Lumpur Kepong (-28.0 sen) and Digi (- 21.0 sen) underperformed its peers, while broader market losers include BAT (- RM2.06), Dutch Lady (-RM1.20), SP Setia (-63.0 sen), Panasonic Manufacturing (- 44.0 sen) and Capitaland Malaysia Mall Trust (-41.0 sen).

• On the contrary, broader market charttoppers include Hengyuan Refining (+RM1.66), DRB-Hicom (+43.0 sen), Petron Malaysia (+36.0 sen), Aeon Credit (+32.0 sen) and Bintulu Port (+23.0 sen). Genting and Petronas-affiliated heavyweights like Genting Malaysia (+15.0 sen), Petronas Chemicals (+15.0 sen), Genting (+11.0 sen) and Petronas Dagangan (+10.0 sen) dominated the Main Board advancers. RHB Bank (+6.0 sen) also extended its gains for the second consecutive trading session.

• The majority of the Asian equities finished on an upward bias on the first trading day of the year. The Nikkei was closed for a holiday, while China stock indices finished higher as the Shanghai Composite (+1.2%) rallied, following better-than-expected manufacturing data, alongside the Hang Seng Index (+2.0%) which hit a ten-year high. The majority of the ASEAN stockmarkets also advanced yesterday.
• U.S. equities kicked off the New Year on an upbeat tone, lifted by expectations of lower corporate taxes ahead of the release of employment data on Friday. The Dow notched gains of 0.4%, boosted by Disney (+4.0%), on the back of a positive growth outlook. Meanwhile, the Nasdaq (+1.5%) and the S&P 500 (+0.8%) also hit fresh record highs on Tuesday.
• Key benchmark European indices extended its losses, sentiments weighed down by the geopolitical unrest in Iran and newly released economic data. The FTSE slipped into the red as slower U.K. manufacturing data missed expectations, albeit slightly offset by gains in mining stocks like Anglo American (+2.9%). Similarly, the CAC and the DAX also declined by 0.5% and 0.4% respectively.

The Day Ahead

• The FBM KLCI’s retreat yesterday was very much expected after the strong push towards the end of last year that prompted the profit taking activities at the start of the year. Nevertheless, the key index has done well to find support at around the 1,780 level. Although there appears to be more room for further consolidation, we think the downside bias may ebb for the time being as the still sanguine global market performance may prompt a quick rebound.

• While a quick rebound is in store, we also do not think there will be significant upsides as selling into strength strategies could limit the near term gains. At the same time, the recent gains are also seen??????? as overdone, thereby placing a lid on the potential gains. On the upside, there are resistances at 1,790 and 1,800 points levels, while the supports are at 1,780 and 1,770 respectively.
• We also continue to think that market breadth will remain on the positive side as more retail players return to the market, albeit the buying is still selective.

Company Briefs

• Rhone Ma Holdings Bhd has entered a joint venture with CEVA Sante Animale S.A. for the exclusive distribution of the latter's animal health products related to swine. The agreement allows Rhone Ma to distribute, promote and sell CEVA's products in Malaysia for a period of three years, with an extension of one year unless objected to by either party, effective 1st January 2018. (The Star Online)

• Malaysia Pacific Corp Bhd (MPCorp) is in the midst of negotiating with The 21st Metallurgical Development (M) Sdn Bhd (T21) for the re-development of Wisma MPL on Jalan Raja Chulan. T21 and the company have agreed to incorporate a joint venture (JV) company to acquire the company’s shop lot and office units in Wisma MPL.

• The negotiation is currently in the final stage and the final JV agreement has been served to T21 for its execution. (The Edge Daily)

• MB World Group Bhd (MBW) has secured the rights to develop an integrated waterfront in Johor that has an expected gross development value (GDV) of RM1.46 bln. MBW had, on 31st December 2017, entered into a development right agreement with PIJ Property Development Sdn Bhd (PPDSB) for the mixed development.
• Located within Teluk Jawa, Johor Bahru, the development will sit on approximately 49.6 ac. of leasehold land, including 15.0 ac. belonging to the government. It will comprise both commercial and residential components, including a service apartment, affordable houses, townhouses, shop offices and a shopping mall.
• DPSB is expected to complete the project within 10 years from the date of the agreement, as well as obtain all relevant approvals at its own expense. (The Edge Daily)

• Dagang NeXchange Bhd (DNex) has acquired the exclusive rights to offer EC-Council Global Services (EGS) cyber security services in Malaysia through its wholly-owned subsidiary, DNeX Technology Sdn Bhd.

• The agreement will give DNex access to EC-Council’s methodologies, enabling it to learn from cyber security implementation in key global economies. (The Edge Daily)

• MCT Bhd’s major shareholder, Regent Wise Investment Ltd is raising its shareholding in the company to 50.2%, from 33.0%, by acquiring a 17.2% stake from Non-Executive Director Tan Sri Goh Ming Choon for RM202.5 mln.

• Regent Wise is a wholly-owned subsidiary of Philippine Stock Exchange-listed Ayala Land Inc. Upon fulfilment of the condition, Regent Wise will be obliged to extend a mandatory take-over offer to acquire all remaining shares it does not own, for a cash consideration of 88.0 sen per share. (The Edge Daily)

• D’Nonce Technology Bhd is proposing to undertake a private placement of up to 10.0% of its issued share base to raise as much as RM6.1 mln, which will be used to repay bank borrowings.
• The repayment is expected to result in an annual interest savings of about RM450,000, based on the group's outstanding borrowings of RM78.2 mln as at 29th December 2017. The placement is expected to be completed in 1Q2018. (The Edge Daily)
• Berjaya Media Bhd (BMedia) is still looking into formulating a plan to regularise its financial condition, after being classified as an affected listed company issued under Practice Note 17 (PN17) in June 2017. BMedia now has about five and a half months left to submit its regularisation plan to the authorities for approval.

• BMedia slipped into PN17 status in June 2017 after its shareholders’ equity fell short of listing requirements. (The Edge Daily)

• Paramount Corp Bhd is disposing of two parcels of industrial land measuring 9.4 ac.in Kota Damansara to an indirect wholly-owned subsidiary of Aluminium Company of Malaysia Bhd (Alcom) for RM92.1 mln.

• The proposed disposal provides an opportunity for Paramount to unlock the value of the land and to utilise the cash proceeds to acquire new land bank that are able to generate higher returns within a shorter turnaround time, to improve cash liquidity for the group’s integrated developments and to reduce bank borrowings. (The Edge Daily)

• Prestariang Bhd’s Memorandum of Understanding (MoU) with Kumpulan Modal Perdana Sdn Bhd (KMP) to help develop a tertiary education facility has lapsed.
• To recap, KMP entered into the MoU in January 2013 with Universiti Malaysia of Computer Science and Engineering (UniMY), a tertiary education facility established under Prestariang Education Sdn Bhd. However, there had been no material development with regards to the proposed collaboration under the MoU. (The Edge Daily)

Source: Mplus Research - 3 Jan 2018