Reverting To A Rangebound Trend

• Tracking the strong recovery on Wall Street overnight, the FBM KLCI (+1.3%) rebounded yesterday as the key index hovered in the positive territory throughout the trading session. The lower liners also closed mostly higher as the FBM Small Cap and FBM ACE added 0.01% and 0.5% respectively, while the REITS (-0.2%) sector was the sole decliner on the broader market.

• Market breadth turned positive as advancers outnumbered decliners on a ratio of 625-to-460 stocks. Traded volumes, however, fell 36.3% to 3.32 bln shares as investors remain cautious of the volatile market sentiment.

• Nestle (+70.0 sen) topped the big board gainers list, followed by Petronas Gas (+50.0 sen), Public Bank (+46.0 sen), Hong Leong Financial Group (+44.0 sen) and Tenaga (+26.0 sen). Hartalega (+66.0 sen) was ranked as the top gainer on the broader market after reporting a strong set of quarterly earnings, while other significant gainers include Malaysia Airport Holdings (+43.0 sen), KESM Industries (+40.0 sen), LPI Capital (+30.0 sen) and Top Glove (+30.0 sen).

• In contrast, notable losers on the broader market include Panasonic (-54.0 sen), Heng Yuan (-28.0 sen), Aeon Credit (-22.0 sen), Bintulu Port (-20.0 sen) and Enra Group (-19.0 sen). There were only four decliners on the key index – Genting (- 15.0 sen), Sime Darby (-4.0 sen), Hap Seng (-Hap Seng 3.0 sen) and Petronas Chemicals (-1.0 sen).

• Japanese equities rebounded as the Nikkei (+0.2%) advanced after erasing most of its intraday gains, lifted by gains in technology stocks. The Hang Seng Index (-0.9%) trended lower for the third straight session to close at a five-week low on weakness in property shares, while the Shanghai Composite (-1.8%) gave up all its intraday gains after enduring a volatile trading session. ASEAN stockmarkets, meanwhile, ended mostly lower yesterday.
• The final hour profit taking sent Wall Street lower yesterday as the Dow fell 0.1% after lingering mostly in the positive territory. The weakness was mainly due to the renewed weakness in crude oil prices that fell to a one-month low amid the larger-than-expected inventory data. On the broader market, the S&P 500 slipped 0.5%, dragged down by the energy sector (-1.7%), while the Nasdaq finished 0.9% lower.
• Earlier, European benchmark indices – the FTSE (+1.9%), CAC (+1.8%) and DAX (+1.6%), all staged a strong recovery from their previous session’s selloff, taking cue from the positive opening on Wall Street. Meanwhile, signs that Germany putting off its political differences aside also alleviated the region’s market sentiment.

THE DAY AHEAD

• The key index managed to post a decent recovery yesterday on the heels of Wall Street’s recovery. Going forward, however, we think the market could revert to a sideway trend as cautiousness is still prevailing amid the still unstable market environment over the near term.

• Therefore, we see increased volatility as further gains could be tempered by quick profit taking activities as market participants look to preserve their short term gains from the rebound. At the same time, we also see market participation waning ahead of the Lunar New Year break next week and many market players shying away from the market with the fewer available positive catalysts. Hence, we see the key index lingering within the 1,830-1,840 levels over the near term.? Meanwhile, the waning market interest could be most pronounced among the lower liners and broader market shares as investor sentiments are still fragile and this could send more retail players to the sidelines.

COMPANY BRIEFS

• Benalec Holdings Bhd has declined to sell 12 plots of land in Pekan Klebang, Melaka Tengah, Melaka, to engineering solutions provider Spring Gallery Bhd for RM186.6 mln. The group has received three letters of offer from Spring Gallery on 26th January 2018. The plots, measuring a collective 4.44 mln sq. ft., are all leasehold lands with their leases set to expire between April 2111 and October 2112. (The Edge Daily)

• Malaysia Marine and Heavy Engineering Holdings Bhd (MMHE) posted a 4Q2017 net profit of RM48.1 mln, from a net loss of RM119.7 mln in the same quarter last year, boosted by improvements in its heavy engineering segment which returned to black. Revenue, however, fell 18.0% Y.o.Y to RM248.0 mln, from RM303.6 mln a year ago. The group has also announced an interim dividend of 3.0 sen per share, payable on 8th March 2018. (The Star Online)

• Hibiscus Petroleum Bhd’s 50.0%-owned Anasuria Operating Co Ltd (AOC) is expected to drill and complete its first side-track well on the Guillemot-A field by the 1H2018.

• The execution and completion of the side-track well located off the North Sea in United Kingdom is a planned production enhancement project at the Anasuria Cluster concession off the North Sea, which will unlock 1.01 mln barrels of oil from its current net proven and probable reserves. (The Star Online)

• Scicom (MSC) Bhd has clinched a contract to develop, implement, operate and maintain an integrated Cambodia Tourism Management System for the country's Ministry of Tourism. The fiveyear contract also came together with a two year extension option.

• The expected revenue from this contract is based on the number of air travellers to-and-from Cambodia, but did not indicate the estimated value of the project. (The Edge Daily)

• Malaysia Building Society Bhd (MBSB) has completed its RM645.0 mln acquisition of Asian Finance Bank (AFB) yesterday after paying the balance cash consideration of RM357.2 mln as well as the allotment of the consideration shares in accordance with the terms of the sale and purchase agreement. (The Edge Daily)

• Bonia Corp Bhd is contemplating a demerger of its wholly-owned unit, CRG Inc Sdn Bhd and the latter's subsidiaries (collectively the CRG Group), which it plans to subsequently list on the LEAP Market of Bursa Malaysia.

• CRG's subsidiaries are principally involved in the designing, manufacturing, promoting, marketing, distribution and retailing of Carlo Rino and CR2 branded fashion products.

• The exercise involves the proposed conversion of CRG into a public company, the capitalisation of part of the retained earnings of CRG into new ordinary shares and the subdivision of existing ordinary shares in CRG. Bonia is also proposing to distribute its entire shareholding in CRG by way of a dividend-in-specie distribution, on a pro-rata basis, to its shareholders. (The Star Online)

• Berjaya Assets Bhd (BAssets) has purchase about 0.94% equity stake (or 3.6 mln shares) in Berjaya Food Bhd (BFood), for RM6.1 mln, increasing its total shareholding to around 2.0% stake (or 7.6 mln shares) in the latter. The acquisitions were made at market prices and funded by internal funds. (The Edge Daily)

• MCT Bhd‘s major shareholder, Philippine-listed Ayala Land Inc, is exploring options to boost MCT's public shareholding spread. MCT’s public shareholding spread stood at 24.7% as at 5th February 2018 and does not comply with the Main Market listing requirements where at least 25.0% of a company's listed shares must be in the hands of public shareholders.

• Consequently, it will explore various options to adjust the public shareholding spread issue within three months of the closing date of the offer, or such time frame as allowed by the authorities. (The Edge Daily)

Source: Mplus Research - 8 Feb 2018