Looking For A Follow-Through

• The FBM KLCI (+0.5%) rallied for the fourth-straight session, supported by foreign buying-interest. The lower liners – the FBM Small Cap (-0.5%) and the FBM Ace (-0.6%), however, drifted lower with the exception of the FBM Fledgling (+0.3%). The broader market also ended mostly higher – led by gains in the Consumer Products (+1.2%) subsector.

• Market breadth was still lacklustre although slightly better than Tuesday as decliners edged advancers slightly on a ratio of 443-to-437 stocks. Meanwhile, traded volumes rose 19.9% to 2.35 bln, in-tandem with the recovery in the broader market.

• Topping the blue chip gauge on Wednesday were Nestle (+RM4.70), Hong Leong Financial Group (+20.0 sen), PPB Group (+20.0 sen), Public Bank (+16.0 sen) and Digi (+13.0 sen). Carmakers like UMW (+20.0 sen) and Edaran (+17.5 sen) rallied, followed by Fraser & Neave (+72.0 sen), Carlsberg (+50.0 sen) and LPI Capital (+14.0 sen).

• On the contrary, broader market losers include Dutch Lady (-32.0 sen), Globetronics (-31.0 sen), Hartalega (-16.0 sen), Far East Holdings (-15.0 sen) and Inari Amerton (-13.0 sen). The only five Main Board decliners were IHH Healthcare (-11.0 sen), Maybank (-6.0 sen), Genting Malaysia (-3.0 sen), KLCC (- 1.0 sen) and Sime Darby Plantations (-1.0 sen).

• Key regional indices gave up earlier gains to close lower on Wednesday as sentiments remain volatile ahead the U.S. Federal Reserve’s March meeting. The Nikkei was closed for its national holiday, while the Shanghai Composite closed 0.3% lower at 3,281.0 points. Profittaking in Geely Automobile (-6.2%) weighed on the Hang Seng Index (-0.4%), although the Chinese carmaker’s profits more than doubled last year. ASEAN stockmarkets meanwhile closed mostly in the red yesterday.
• Wall Street moved lower on rising bond yields after the U.S. Federal Reserve announced its first increase in the benchmark lending rate for the year, although losses were limited by the rally in energy stocks. The Dow (-0.2%) gave up earlier gains and closed in the red, weighed down by Apple (-2.3%). Techladen indices, the S&P 500 and Nasdaq were also pressured, finishing lower by 0.2% and 0.3% respectively.
• Earlier, benchmark European bourses were splashed in red on renewed fears of potential Chinese tariffs as Washington prepares to announce up to US$60.0 bln worth of import duties on Chinese goods this Friday. The FTSE lost 0.3% after trading in the red for the entire session – led by losses in Kingfisher (-10.7%) following softer-than-expected quarterly results from the home improvement retailer. The DAX flatlined, while the CAC trimmed 0.2% to close slightly below the 5,240.0 psychological level.

THE DAY AHEAD

• Once again, the late institutional support lifted the key index in an otherwise broadly indifferent trading session and to send the key index past the 1,860 level. Despite the gains, we reiterate our view that the general market environment is still floundering and it is only the selective buying that is shoring up the market, which we deem as superficial.

• With the buying still selective pushing up the key index over the past two sessions and the general market environment still insipid, we think that further upsides may be more difficult to come by and a near term pullback could set in as follow through buying may become elusive in an environment where there remains few positive leads. Therefore, we think the key index will find the 1,870 level a challenge to clear, while the supports at 1,860 and 1,850 loom large.
• There is no change to our immediate view on the lower liners and broader market shares as we think they will likely stay subdued in view of the fewer available positive leads to entice greater retail participation.

MACRO BRIEF

• Malaysia's inflation, as measured by the consumer price index (CPI), rose 1.4% Y.o.Y in February 2018, mainly on the increases seen in the index for food and non-alcoholic beverages segment. For the January-February 2018 period, The CPI increased 2.0% Y.o.Y.

• Among the main groups, the increases were food and non-alcoholic beverages index (+3.0% Y.o.Y), furnishings, household equipment & routine household maintenance (+2.1% Y.o.Y), health (+2.1% Y.o.Y), housing, water, electricity, gas & other fuels (+2.0% Y.o.Y), and restaurants & hotels (+1.8% Y.o.Y). (The Edge Daily)

COMPANY BRIEF

• Sapura Energy Bhd has secured a contract from Mubadala Petroleum Ltd to build an integrated central gas processing platform facility in Block SK320, offshore waters of Sarawak. The job entails engineering, procurement, construction, installation and commissioning (EPCIC) in the Pegaga development project. The project is expected to be completed by 3Q021. (The Star Online)
• Sumatec Resources Bhd has agreed to settle a suit against Hoe Leong Corp Ltd and Ebony Ritz Sdn Bhd for RM27.0 mln. Under a settlement agreement that was set up by the Singapore Mediation Centre, Sumatec will pay RM7.0 mln to Ebony Ritz. It will also issue RM20.0 mln worth of Redeemable Convertible Preference shares (RCPS) to Ebony Ritz.
• The parties have also agreed to end all litigation upon Sumatec’s successful completion of its corporate exercise no later than 30th October 2018. (The Edge Daily)

• Soon-to-be-delisted YFG Bhd has submitted an appeal to Bursa Malaysia requesting an extension of time to submit a regularization plan following an earlier rejection by the stock exchange.

• YFG was appealing against the commencement of delisting procedures on the securities of the company as well as for the stock exchange to reconsider the rejection and to approve the extension of time to submit its new regularisation plan.

• Given that the appeal was submitted within the appeal timeframe, the removal of the securities of the company from the official list of Bursa Malaysia on 26th March 2018 shall be deferred pending the decision by Bursa Malaysia on the appeal. (The Edge Daily)

Source: Mplus Research - 22 Mar 2018