Insipid Trend Looks To Stay

• Despite opening higher at the start of the trading bell, gains were short lived as quick profit taking sent the FBM KLCI (- 0.4%) lower yesterday as the key index halted a streak of four straight winning days. The lower liners – the FBM Small Cap (-1.2%), FBM Fledgling (-1.4%) and FBM ACE (-2.2%), all took a beating, while the broader market were splashed in red.

• Market breadth stayed negative as decliners thumped advancers on a ratio of 764-to-274 stocks, while 372 stocks closed flatlined. Traded volumes fell 7.5% to 4.60 bln shares amid the negative market sentiment.

• Petronas Gas (-62.0 sen) topped the big board decliners list, followed by Hong Leong Bank (-28.0 sen), Tenaga (-22.0 sen), Genting Malaysia (-21.0 sen) and AmBank (-13.0 sen). Petroleum refineries like Heng Yuan (-RM1.80) and Petron Malaysia (-86.0 sen) sank, while other notable decliners on the broader market include Panasonic (-50.0 sen), MagniTech Industries (-24.0 sen), BAT (-22.0 sen) and Sarawak Oil Palms (-19.0 sen).

• In contrast, United Plantations (+34.0 sen), Denko (+15.0 sen), Triplc (+15.0 sen) and Dutch Lady (+14.0 sen) led the broader market advancers list. Meanwhile, Nestle (+20.0 sen), Genting (+4.0 sen), Sime Darby (+4.0 sen), Sime Darby Plantations (+4.0 sen) and CIMB (+3.0 sen) rose on the key index.

• Japanese equities retreated as the Nikkei (-0.4%) retreated from the 26-year high on weakness in financial and real estate shares. The Hang Seng Index (+0.4%), however, edged higher to close above the 32,000 psychological level after recovering all its intraday losses, while the Shanghai Composite added 0.9% to close at fresh two-year hig.. ASEAN stockmarkets, meanwhile, closed mostly higher.
• Wall Street retreated from their record high levels overnight as the Dow slipped 0.4% amid concerns over the decision from Congress on passing a spending bill that could led to the possibility of the government shutting down at the end of the week. On the broader market, the S&P 500 declined 0.1%, dragged down by the weakness in the real estate sector (- 1.0%), while the Nasdaq closed 0.03% lower after erasing its intraday gains.
• Earlier, European stockmarkets ended mostly higher as the CAC and DAX added 0.02% and 0.7% respectively, taking cue from the positive developments in the previous session on Wall Street as technology shares advanced. The FTSE, however, fell 0.3% as the appreciation of the British Pound limited gains.

THE DAY AHEAD

• While we expected stocks on Bursa Malaysia to head higher yesterday amid the positive global equity market undertone, the selling pressure was still prevalent to leave the key index near the 1,820 support level. Market breadth was also under pressure from profit taking activities as follow through buying remains elusive, which we see continuing ahead of the weekend.

• Under the prevailing environment, we expect the insipid market conditions to persist for longer- especially as follow through buying is still weak. This is likely to result in FBM KLCI listed stocks on a sideway-to-lower trend as the key index continues to find support around the 1,800 and 1,820 levels. The process will also be akin to a base building exercise which could become a springboard for further upsides, if a firmer base is built. On the upside, the resistances remain at the 1,830-1,840 levels for now.
• We also see the lower liners and broader market shares staying on the wayside as profit taking activities are prevalent and fresh buying is still tentative after the strong gains earlier in the month. Therefore, the downside bias will remain a feature for now as new leads are also largely absent.

COMPANY BRIEF

• G Reka Perunding Sdn Bhd has emerged as a substantial shareholder in Atta Global Group Bhd, after buying about 37.5 mln shares (or 24.3% equity stake) in the steel processing and trading company on 16th Januar, 2018.

• G Reka had paid a total of RM37.5 mln, making it the group’s second-largest shareholder after Tan Kim Hee. Further, the group also saw 13.3 mln shares (or about 8.9% equity stake) of the company traded off-market yesterday for a total of RM13.7 mln. (The Edge Daily)

• Chemical Company of Malaysia Bhd (CCM) has proposed to reactivate its Pasir Gudang Works 1 (PGW1) plant, which will cost around RM68.5 mln - including the cost of equipment purchase and installation. The project will take about 18 months to complete and is expected to be ready by 2Q2019. CCM expects the reactivation of PGW1 plant to increase the production capacity for chlor-alkali products by about 50.0%. (The Star Online)

• Permodalan Nasional Bhd (PNB) and the Employees Provident Fund (EPF) has inked a Heads of Terms with Battersea Phase 2 Holding Company Ltd to acquire the commercial assets of the Battersea Power Station second phase for 1.61 bln pounds (RM8.8 bln).
• Battersea Phase 2 Holding Company Ltd is wholly-owned by Battersea Project Holding Company Ltd, which in turn is held by SP Setia Bhd (40%), Sime Darby Bhd (40%) and the EPF (20%). The proposed acquisition is to reorganise the ownership of the Battersea Power Station’s commercial property under PNB and EPF who are long term investors, whilst Sime Darby Property and SP Setia are principally property developers. (The Star Online)
• Green Packet Bhd has confirmed that in the midst of negotiation with MYTV Broadcasting Sdn Bhd for a supply contract. This comes following a news report that stated that Green Packet will soon announce it has bagged a deal worth RM300.0 mln to supply set-top boxes to television broadcasting company MYTV. (The Edge Daily)

• Crest Builder Holdings Bhd was awarded a RM149.5 mln contract to build a 44-storey hotel with a car park podium on Jalan Imbi, from Mega Development Capital Development Sdn Bhd. The project is expected to run for 39 months. (The Star Online)

• CIMB Group Holdings Bhd‘s 94.1%- owned indirect subsidiary, CIMB Thai Bank Public Co Ltd returned to the black in 2017 with a net profit of 384.9 mln baht (RM47.7 mln), from a net loss of 629.5 mln baht in 2016 - hepled by higher operating income and lower provisions.

• Meanwhile, CIMB’s brokerage, CIMB Securities International Pte Ltd (CSI) will be renamed CGS-CIMB Securities following completion of the disposal of CIMB's 50.0% shareholding in CSI to China Galaxy Securities Co Ltd (CGS). (The Star Online)

Source: Mplus Research - 19 Jan 2018