Going Nowhere As The FBM KLCI Builds Base

• Despite hovering mostly in the negative territory, the FBM KLCI (+0.01%) managed to recoup all its intraday losses, inching marginally higher yesterday on late buying interest on selective index heavyweights. The lower liners – the FBM Small Cap (-0.6%), FBM Fledgling (-0.9%) and FBM ACE (-0.6%), however, remained in the red despite trimming their intraday losses.

• Market breadth stayed negative as decliners outweighed advancers on a ratio of 765-to-324 stocks, while 358 stocks closed flatlined. Traded volumes, however, rose 20.9% to 6.53 bln shares as bargain hunting activities, particularly in technology shares took center stage.

• Nestle (+RM1.90) took the top spot on the big board advancers list after rising for the fifth straight session, followed by Genting (+11.0 sen), KLCC (+11.0 sen), Tenaga (+6.0 sen) and Press Metal (+5.0 sen). Significant gainers among the broader market Dutch Lady (+52.0 sen), Johore Tin (+19.0 sen), United Plantations (+18.0 sen), IJM (+15.0 sen) and Lingkaran Trans Kota (+15.0 sen).

• On the flipside, key decliners on the broader market include BAT (-80.0 sen), Heng Yuan (-80.0 sen), KESM Industries (-68.0 sen), Petron Malaysia (-50.0 sen) and Panasonic (-44.0 sen). Meanwhile, Petronas Gas (-54.0 sen), Hong Leong Bank (-26.0 sen), Petronas Dagangan (- 18.0 sen), Genting Malaysia (-8.0 sen), and MISC (-5.0 sen) were the key index biggest decliners.

• Asia stockmarkets advanced with the Nikkei jumping 1.0% to close marginally below the 24,000 psychological level after the Japanese Yen weakened against the U.S. Dollar. The Hang Seng Index (+1.8%) resume its rally to close at a fresh record high level on improved earnings from corporate giants like Tencent (+2.8%) and AIA Group (+1.5%), while the Shanghai Composite added 0.8%. ASEAN stockmarkets, meanwhile, ended mostly higher.
• Wall Street retreated from their record high levels overnight after erasing all their intraday gains as the Dow fell 0.04%, after briefly re-tested the 26,000 psychological level. On the broader market, the S&P 500 slipped 0.4% on weakness in energy and industrial shares after commodity prices fell, while the Nasdaq finished 0.5% lower.
• Earlier European stockmarkets closed mostly higher but trimmed most of their intraday gains as the CAC and DAX climbed 0.4% and 0.1% respectively after the Euro Currency weakened against the Greenback. The FTSE, however, declined 0.2% after the inflation rate for December 2017 eased to 3.0%.

THE DAY AHEAD

• The upbeat market conditions that permeated the market in the past few weeks appears to be weakening as profit taking is escalating with the few follow through buying interest. The trend is most pronounced among the lower liners and broader market sharesand we think the similar market conditions will persist over the near term that could again see the above shares continuing their consolidation spell after the recent surge has left many stocks overbought.

• On the key index, conditions are also expected to be cautious with the buying interest also largely absent after the recent gains. Nevertheless, the FBM KLCI is seemingly building up a base around the 1,820-1,825 levels, which is encouraging as it allows the recent gains to be digested without causing a major pullback.
• Therefore, we see the base building exercise sustaining on the key index with the resistances at the 1,830-1,840 levels, while the supports remain at the 1,800- 1,820 levels.

COMPANY BRIEF

• Advance Synergy Bhd is buying two commercial properties for a combined RM41.0 mln. The group has inked signed a sale and purchase agreement (SPA) with Petaling Garden Sdn Bhd for the proposed acquisition of a 70.0% equity stake in a detached commercial fivestorey building block in Jalan Yap Ah Shak for RM18.9 mln, as well as with Temasya Development Co Sdn Bhd for a 70.0% stake in a detached commercial four-storey building in Temasya Glenmarie for RM22.1 mln. (The Edge Daily)

• Ewein Bhd has denied that it is involved in the controversial RM6.3 bln Penang undersea tunnel project, stating that it had merely entered into a joint-venture (JV) with Consortium Zenith Construction Sdn Bhd in 2013 to develop a 3.7 ac. piece of land in Penang. Ewein has also refuted allegations that it had acquired the land from the Penang state government. (The Star Online)

• Meanwhile, Vertice Bhd, previously known as Voir Holdings Bhd has also denied its involvement in the project aside from its recent investment of 13.2% in Consortium Zenith. (The Edge Daily)

• Caely Holdings Bhd is planning a bonus issue of 40.0 mln warrants on the basis of one warrant-for-every two existing shares, in a bid to raise up to RM20.0 mln at an indicative exercise price of 50.0 sen per warrant. The funds raised will be used for future working capital. (The Star Online)
• UMW Oil & Gas Corp Bhd was awarded a three-year umbrella contract from Petronas Carigali Sdn Bhd for the provision of hydraulic workover units (HWU). The agreement include the use of any of UMW Workover Sdn Bhd’s five HWU to undertake workover services, which are rendered in performing maintenance and/or remedial treatments on an oil or gas well. (The Edge Daily)
• Leweko Resources Bhd will lend its expertise in ultra-high performance cementitious composite technology to India-based Shinde Developers Pvt Ltd (SDPL), allowing the latter to manufacture, sell, export and market products under the brand name “DURA” within India and other South Asian countries. (The Edge Daily)

• Telekom Malaysia Bhd and Tenaga Nasional Bhd have entered into a Memorandum of Understanding (MoU) to jointly-develop and implement the government’s Nationwide Fiberisation Plan.

• The two government-linked companies said the collaboration will result in the most efficient cost structure and accelerate the fibre broadband network reach. (The Star Online)

• Malaysia Building Society Bhd (MBSB) is planning to rollout up to RM700.0 mln in financing for the development of eight more Federal Territories Affordable Housing (Rumawip) projects, with a total gross development value (GDV) of about RM2.0 bln. (The Edge Daily)

• EcoWorld International Bhd (EWI) has hit cumulative sales of RM7.7 bln from property development projects in the UK and Australia as at 31st October 2017 - including RM7.57 bln exchanged contracts and reserved units worth RM147.0 mln.

• The group is also on track to achieve its maiden handover of two blocks within its London City Island Phase 2 project and one block of the Embassy Gardens Phase 2 project in FY18. (The Edge Daily)

• Units of Carimin Petroleum Bhd, Dayang Enterprise Holdings Bhd, Deleum Bhd, Petra Energy Bhd, and Sapura Energy Bhd had secured contracts by Petronas Carigali Sdn Bhd to provide maintenance, construction and modification services at its offshore facilities in peninsular Malaysia, Sabah and Sarawak.

• The aforementioned companies are expected to carry out engineering and maintenance services, which include topside major maintenance as well as facilities improvement projects for a five-year period from September 2017, with an option to extend for an additional year. (The Star Online)

Source: Mplus Research - 17 Jan 2018