Market Overbought, Pullback Due

• The FBM KLCI (+0.8%) started off the week on a firm note as the key index advanced for the fourth consecutive session to close at an intraday high of 1,832.15 pts yesterday. The lower liners – the FBM Small Cap (+2.0%), FBM Fledgling (+1.6%) and FBM ACE (+1.5%), all ended positively, while the REITS (- 0.4%) sector continues to underperform the positive broader market.

• Expectedly, market breadth stayed positive as advancers thumped decliners on a ratio of 853-to-312 stocks, while 327 stocks flatlined. Traded volumes soared 19.3% to 6.96 bln shares as the upbeat market sentiment continues to attract fresh funds.

• Petronas-related companies like Petronas Gas (+84.0 sen) and Petronas Dagangan (+46.0 sen) anchored the winners list on the FBM KLCI, followed by Hong Leong Bank (+40.0 sen), Tenaga (+28.0 sen) and KLK (+24.0 sen). Among the biggest winners on the broader market include KESM Industries (+RM1.28), Fraser & Neave (+56.0 sen), United Plantations (+56.0 sen) and UMW Holdings (+52.0 sen). MCT added 4.0 sen after receiving an unconditional takeover offer from Ayala Land Inc

• Notable decliners on the broader market were Far East Holdings (-28.0 sen), Lebtech (-20.0 sen), Unisem (-19.0 sen), UOA Development (-12.0 sen) and Lafarge (-11.0 sen). Meanwhile, Genting (-12.0 sen), KLCC (-2.0 sen), Genting Malaysia (-2.0 sen), DIGI (-2.0 sen) and Axiata (-1.0 sen) were the only decliners on the big board.

• Asia benchmark indices advanced as the Hang Seng Index (+0.3%) recorded its tenth consecutive session of gains, underpinned by gains in technology and property shares. The Shanghai Composite (+0.5%) advanced for the seventh straight session to close above the 3,400 psychological level. Japanese stockmarkets was closed for the Comingof-Age Day public holiday. ASEAN stockmarkets, meanwhile, ended positive.
• U.S. stockmarkets ended mixed overnight as the Dow (-0.1%) snapped a streak of four days of gains on profit taking activities in banking stocks after the U.S. Dollar strengthened against a basket of currencies following three straight weeks of decline. On the broader market, both the S&P 500 and Nasdaq, however, climbed 0.2% and 0.3% higher respectively, lifted by technology shares.
• Earlier, European stockmarkets ended mostly higher as the CAC (+0.3%) and DAX (+0.4%) extended their gains after the Eurozone’s economic sentiment rose to 116 in December 2017 – the highest level since October 2000. The FTSE, however, slipped 0.4%, dragged down by the sluggish corporate earnings in retail stocks like Mothercare (-27.5%) and McBride (-12.4%).

The Day Ahead

• We continue to think that the Malaysian stockmarket is due for a correction to adjust from its bout of overbought after the key index has gained more than 7.0% over the past three weeks, which we believe is overdone. A consolidation will allow the gains to be digested as well as allow the key index to take a breather after the steep gains and to allow the market to gear up for the next wave upwards.

• Therefore, we think that further upsides will become increasingly difficult to come by as a pullback looms with the 1,837- 1,840 levels the next resistances. The main supports, meanwhile, are at 1,800-1,820 levels.
• We also think the lower liners and broader market shares are likely to see profit taking activities escalating after their hefty gains recently. However, the rotational plays will still persist amid a still positive market undertone and this could still keep short-term players invested for longer.

Company Brief

• Trading of NWP Holdings Bhd‘s shares will be suspended effective 9th January, 2018 as the company failed to submit its FY17 annual report before the allotted time fixed at 31st December last year.

• Bursa Malaysia has announced that if the group fails to submit the relevant statements within six months from the expiry of the timeframe, the exchange may commence delisting procedures against the issuer in addition to other enforcement action that it may take. (The Edge Daily)

• Malakoff Corp Bhd is collaborating with Touch Group Holdings Sdn Bhd on a possible collaboration to develop several renewable energy projects, particularly in the large-scale photovoltaic (PV) and mini hydropower projects in Pahang.

• Under the Memorandum of Understanding (MoU) that was signed, Malakoff will conduct a feasibility study for the purpose of ascertaining the technical and commercial viability of the projects. (The Star Online)

• MESB Bhd has been granted the right by Crocodile International Sdn Bhd (CISB) to apply the ‘Crocodile’ trademark on the brand’s men products sold in Malaysia.

• The group has signed a licence agreement with CISB, whereby CISB grants MESB the exclusive licence to use the ‘Crocodile’ trademark for the design, manufacture, advertisement, distribution, sale and promotion of the items.
• The licence is for a period of two years and 11 months from 1st February 2018 to 31st December 2020 and will be renewed for another two years, commencing 1st January 2021. (The Star Online)
• AirAsia Bhd‘s shareholders have approved the planned AirAsia BhdAirAsia Group Bhd (AAGB) share exchange under the AirAsia’s reorganisation plan.

• The reorganisation will see AAGB assuming AirAsia Bhd's listing status on Bursa Malaysia and entails the exchange of 3.34 bln existing AirAsia Bhd shares for new AAGB shares on a one-for-one basis.

• AirAsia group Chief Executive Officer (CEO) Tan Sri Tony Fernandes said that the reorganisation signifies another step forward towards the group's aim of creating a single holding company within Asean. (The Edge Daily)

• Sime Darby Property Bhd is planning a slew of new product launches within its City of Elmina for 2018, including an affordable housing development under the state government programme Rumah Selangorku.

• The pipeline launches include semidetached units in Denai Alam and double-storey linked units in Elmina Green phase 1B, as well as affordable housing development, which are slated to be launched in June.

• Sime Darby Property have also launched the new Elmina Interchange, which connects the City of Elmina to the Guthrie Corridor Expressway with enhanced accessibility to various areas of the city and surrounding locations, (The Edge Daily)

• Yong Tai Bhd has obtained RM100.0 mln worth of financing from the Bank of China for the construction of the Encore Melaka theatre at the group's Impression City mixed development in Melaka.

• Moving forward, RM90.0 mln of the loan will be used to finance the construction of the theatre, which cost between RM300.0 mln and RM400.0 mln. The remaining RM10.0 mln will be used for initial operational expenses. (The Edge Daily)

• CIMB Group Holdings Bhd's subsidiary Touch 'n Go Sdn Bhd has secured Bank Negara Malaysia's approval to offer mobile e-wallet services in Malaysia. The service will be operated by TNG Digital Sdn Bhd, a joint-venture (JV) company formed with Ant Financial Group in July 2017.

• The mobile e-wallet will facilitate payments in a cashless and cardless environment by leveraging on Ant Financial's Alipay technology platform, which currently supports over 450 mln users in China via its Alipay payments system. (The Edge Daily)

• SCH Group Bhd is planning to raise RM19.1 mln through private placement to raise fresh capital for future acquisition, which the company has yet to confirm.

• The private placement will be issued in tranches, involving up to 103.0 mln new shares and will be completed by June 2018. (The Edge Daily)

• Ajiya Bhd is partnering Ascension Technology Sdn Bhd to promote affordable housing construction systems in Malaysia by using Ajiya's innovative construction technique.
• Both parties has signed a MoU which will see Ajiya as the green integrated building solutions (AGIBS) housing components/materials supplier and the installer of AGIBS for projects undertaken by Ascension. (The Edge Daily)
• Westports Holdings Bhd‘s CEO, Ruben Emir Gnanalingam has been redesignated as Group Managing Director. Mr. Gnanalingam was first appointed to the role in January 2009 after joining the Board of Westports in July 2005. He is the eldest son of Westports’ Executive Chairman, Tan Sri G. Gnanalingam who has a 45.5% shareholding in the group. (The Edge Daily)

Source: Mplus Research - 9 Jan 2018