Waiting For A New Trend

• The FBM KLCI (-0.3%) closed lower last Friday as market sentiment was dented by the renewed weakness on Wall Street. The key index subsequently fell 0.3% for the week. The lower liners – the FBM Small (-0.9%), FBM Fledgling (-0.1%) and FBM ACE (-0.2%) all trended lower, while the Consumer Products (+0.4%) and Finance (+0.03%) sectors outperformed its peers.

• Market breadth remained negative still as losers outpaced winners on a ratio of 656-to-291 stocks. Traded volumes shrank 24.7% to 2.55 bln shares amid the negative market sentiment.

• Key losers on the FBM KLCI were Press Metal (-32.0 sen), Genting (-12.0 sen), Genting Malaysia (-11.0 sen), Maxis (- 9.00) and Axiata (-9.0 sen) and Telekom Malaysia (-7.0 sen). Significant decliners on the broader market include Heng Yuan (-62.0 sen), United Plantations (-38.0 sen), Genting Plantations (-34.0 sen), KESM Industries (-30.0 sen) and Air Asia (-25.0 sen).

• Kobay Technology (+31.0 sen) hit limit up last Friday on a surge in its earnings, while other notable gainers on the broader market were Dutch Lady (+14.0 sen), LBI Capital (+11.0 sen), JCBNext (+10.0 sen) and SAM Engineering & Equipment (+10.0 sen). Meanwhile, Nestle (+RM2.80) anchored the key index advancers list, followed by Panasonic Manufacturing (+RM1.18), Hong Leong Financial Group (+10.0 sen), IHH (+10.0 sen), IOI Corporation (+7.0 sen) and Telekom (+7.0 sen).

• Asia benchmark indices remain under pressured last Friday on concern over the U.S’. plan to raise tariffs on steel and aluminum import. The Nikkei tank 2.5% after the Japanese Yen rallied against the U.S. Dollar. The Shanghai Composite slipped 0.6%, while the Hang Seng Index sank 1.5% as the latter saw steel related companies like Maanshan Iron & Steel (- 4.8%) and Angang Steel (-2.4%) taking a beating. ASEAN stockmarkets, meanwhile, was painted mostly in red.
• U.S. stocks closed on a mixed note last Friday as the Dow (-0.3%) retreated for the fourth straight session. On the broader market, the S&P 500 (+0.5%) and Nasdaq (+1.1%) managed to recoup all their intraday losses to close in the green on gains in technology and healthcare stocks.
• Earlier, European benchmark indices extended their losses as concern over the potential trade war on steel and aluminium remains unabated. The FTSE (-1.5%) retreated for the third straight session to close at a 14-month low. The CAC fell 2.4%, while the DAX (-2.3%) closed below the 12,000 psychological level.

THE DAY AHEAD

• There remain few positive catalysts to lift the market as uncertainties still reign on the U.S.’ tariff plans, while on the domestic front, the recently concluded earnings reporting season also generated few leads for investors to follow. Under the prevailing environment, we think the market is likely to stay muted with the dour trend likely to prevail. Nevertheless, there is still substantive support on the index heavyweights, thus their downside risk is limited, in our view.

• On the other hand, the lower liners and broader market shares are likely to see the dour trend persisting despite the onset of the lower transaction cost regime on Mid-and-Small Cap stocks due to the lack of leads. While we see some pockets of rotational interest, the general trend is still insipid as market confidence is still lacking.

• Under the prevailing environment, we think the key index will trend lower, but the downside will be cushioned by selective support on the heavyweights with the 1,850 level providing ample support. The 1,860 level has now become the immediate resistance, followed by the 1,870 level.

COMPANY BRIEF

• Chemical Co of Malaysia Bhd (CCM) plans to pare its debts by disposing a piece of land in Nilai with a book value of RM19.8 mln, as well as its 9.3% equity stake in South Korea-listed PanGen Biotech Inc worth RM49.0 mln as at end-Feb 2018.

• The aforementioned proposals are expected to be completed by 2H2018 and could potentially reduce up to RM14.0 mln annual debt repayment costs, from RM21.0 mln presently. (The Star Online)

• IOI Corp Bhd has completed the sale of its 70.0% equity stake in Loders Croklaan Group BV and its related business to U.S.- listed Bunge Ltd for RM3.79 bln cash. Subsequently, the group will still hold 30.0% shareholding in Loders, although Bunge has the right to purchase the remaining interest in Loders from IOI, and IOI will have the right to sell its interest to Bunge within the next five years. (The Edge Daily)

• Lion Diversified Holdings Bhd has sold part of its land in Kuala Langat, Selangor to Tenaga Nasional Bhd for RM9.9 mln under a compulsory acquisition by the utility firm. The land was sold to facilitate the installation of a 500kV power transmission line. (The Edge Daily)

• Maxis Bhd has appointed its Director, Robert Nason as interim Chief Executive Officer, effective 1st April, 2018 until a new CEO is appointed. Robert will be replacing Executive Director and CEO Morten Lundal, who will leave office on 31st March 2018. (The Edge Daily)
• GD Express Carrier Bhd (GDex) is acquiring retail postal and business services firm MBE Malaysia for RM5.5 mln. The group has inked a conditional share sale agreement with MBE Business Corp Sdn Bhd and MBE Business Holding Sdn Bhd to acquire a 100.0% stake in the business.
• The proposed acquisition represents a strategic move for the group to venture into the retail delivery service sector, on the back of the established network and strong brand name MBE Malaysia has built coupled with the strong support from MBE Malaysia’s business partners currently. MBE Malaysia has 92 outlets which would strengthen GDex’s current network of 79 branches nationwide. (The Star Online)

• Hap Seng Consolidated Bhd is selling its 20.0% interest in Hap Seng Credit Sdn Bhd for RM906.0 mln cash, while its unit HSC International Ltd is selling its entire interest in HSC Sydney Holding Ltd for US$196.5 mln (RM771.2 mln) cash to Hong Kong-based Lei Shing Hong Capital Ltd for RM1.68 bln.

• HSC Sydney, which was incorporated on 18th August 2017 mainly provide financial services. The proposed disposal of HSC Sydney is expected to reap a gain of RM507.7 mln, which which will be used to repay borrowings, fund working capital, investments and expenses. The proposals are expected to be completed by 2H2018. (The Sun Daily)

Source: Mplus Research - 5 Mar 2018