Headed Nowhere

• The FBM KLCI inched 0.1% higher to 1,862.5 points, in-tandem with the recovery in the offshore trend. The FBM Small CAP (+0.1%) eked out gains, although the FBM Fledgling (-0.5%) and the FBM Ace (-0.5%) continued to trade lower. The broader market however closed mostly in the positive territory on Tuesday.

• Market breadth was positive as winners overtook the losers on a ratio of 463-to- 433 stocks. Traded volumes rose slightly by 2.6% to 2.04 bln, in-tandem with the minor recovery in the local bourse.

• Key-index winners like Nestle (+RM1.70), PPB Group (+22.0 sen), Petronas Chemicals (+13.0 sen), Hong Leong Financial Group (+8.0 sen) and Kuala Lumpur Kepong (+8.0 sen) led the blacks on the local bourse. Other top performers were KESM Industries (+40.0 sen), Padini (+20.0 sen), Top Glove (+18.0 sen), Kossan Industries (+17.0 sen) and Uchi Technologies (+16.0 sen).

• Meanwhile, Main Board decliners were BAT (-RM1.18), Hengyuan Refining (-29.0 sen), Dutch Lady (-24.0 sen), Ajinomoto (- 18.0 sen) and WCE Holdings (-16.5 sen). Amongst the underperformers on the local blue chip gauge include MISC (-11.0 sen), Press Metal (-5.0 sen), Hong Leong Bank (-4.0 sen), Maxis (-4.0 sen) and Tenaga Nasional (-4.0 sen).

• Key regional benchmark indices rallied on Tuesday, on a stronger Dollar and recovery in the U.S. futures. The Nikkei added 2.7%, helped by softer Yen and easing political concerns in the local backdrop. The Hang Seng Index and the Shanghai Composite also gained 0.8% and 1.1% respectively, while the most of ASEAN stockmarkets rebounded on Tuesday.

• Weakness in the technology sector weighed on U.S. equities on Tuesday, amid lower Treasury yields as investors sought safe havens. The Dow (-1.4%) slipped into the red in the eleventh hour, albeit slightly offset by gains in General Electric (+4.3%) on speculations of a potential new investor – Warren Buffett. The Nasdaq (-2.9%) and the S&P 500 (- 1.7%) meanwhile, finished sharply lower on losses in major tech-players.

• Major European bourses rebounded from one year low, as investors shrugged off potential global trade tensions and look towards recent corporate news. The FTSE (+1.6%) ended its four consecutive sessions’ of weakness to close higher, lifted by gains in Ferguson (+6.7%) on the latter’s upbeat quarterly results. Meanwhile, Deutsche (+1.9%) led the gains in the DAX (+1.6%) after the titan bank announced its plans to replace its CEO in a bid to turn around the ailing company. The CAC also closed 1.0% higher yesterday.

THE DAY AHEAD

• Yesterday’s market rebound was relatively mild with the buying interest staying weak despite a strong recovery of key global market indices a day earlier as a definitive market direction is still lacking. The indifferent trend now appears to be taking hold with the key index seemingly building up a base around the 1,850-1,870 levels as the market awaits for the announcement of the upcoming General Election.

• Therefore, we think the FBM KLCI will continue to linger in the above levels, even though there is fresh weakness overnight in many global indices as there will be institutional support to keep the key index in the above range for now.

• Meanwhile, the lower liners and broader market shares are still not seeing a revival as yet, with many market participants remaining on the sidelines awaiting for a clearer market direction. Therefore, we expect the FBM Small Cap, and FBM Fledgling indices as well as other lower liners to remain dour for the time being.

COMPANY BRIEF

• Tenaga Nasional Bhd (TNB) has signed six large-scale solar (LSS) photovoltaic power purchase agreements (PPAs) with special-purpose companies (SPCs) set up by the winners of a bidding exercise organised by the Energy Commission in 1Q2017. The SPCs were Kenyir Gunkul Solar Sdn Bhd, Idiwan Solar Sdn Bhd, BGMC BRAS Power Sdn Bhd, Viva Solar Sdn Bhd, Cypark Estuary Solar Sdn Bhd and Cove Suria Sdn Bhd.

• Each SPC would design, construct, own, operate and maintain a solar photovoltaic energy-generating facility with the approved capacity at its proposed location. The PPAs govern the obligations of the parties to sell and purchase the energy generated by the facility for a period of 21 years from the commercial operation date in accordance with the agreed terms and conditions. (Bernama)

• Yinson Holdings Bhd's scheduled work on an FPSO facility for the Ca Rong Do Field Development — Block 07/03 (CRD), located off Vietnam, has been temporarily halted due to a force majeure event. The group’s joint venture company, PTSC Ca Rong Do Ltd had received a notice dated 25th March 2018 from PetroVietnam Technical Services Corporation (PTSC) under the Bareboat Charter Contract on the matter. (The Edge Daily)

• Sime Darby Bhd’s indirect unit, Sime Darby Engineering Sdn Bhd (SDE) was ordered to pay Malaysia Marine and Heavy Engineering Sdn Bhd (MMHE) damages for claims in relation to a dispute over two fabrication yards. However, no specific sum was mentioned. SDE received a notification from the Asian International Arbitration Centre 19th March 2018 that its Arbitral Tribunal had issued its award to MMHE. (The Edge Daily)

• Country View Bhd is acquiring a plot of 163.9-ac. land in Iskandar Putri, Johor from UEM Sunrise Bhd for RM310.0 mln to undertake a commercial development. The acquisition will be partially funded by the disposal of two plots of land in Kedah for a total of RM119.9 mln. The group expects to generate a gross development value of RM1.26 bln from the development which would comprise 463 resort-linked villas, 182 shop-offices and two commercial plots of land. Work is expected to commence in 2020 after approvals from the relevant authorities have been obtained and the entire project is scheduled to be completed in seven years. (The Edge Daily)

• Malaysia Airports Holdings Bhd (MAHB) is exiting the airport business in the Maldives via the disposal of its entire 23.0% stake in GMR Male International Airport Ltd (GMIAL) for US$7.3 mln (RM28.5 mln). MAHB expects to realise a gain of US$7.3 mln from the sale as the total carrying value of GMIAL in the airport operator's book has been fully impaired in 2014. (The Edge Daily)

• Dagang NeXchange Bhd (DNeX) will work with the Department of Education Region V and Naga City of the Philippines to jointly develop a halal park. DNeX recently signed two Memoranda of Understanding with the parties to jointly develop the halal park. Under the MoUs, DNeX is given the exclusive right to undertake several initiatives for the halal park including research and development and certification of product and services within the park. (The Edge Daily)

• MCE Holdings Bhd has secured contracts to supply various electronics and mechatronic components and parts for new Proton car models. The supply of these parts by its wholly-owned unit, Multi-Code Electronics Industries (M) Bhd, is for 10 years, commencing from 31st July 2019. The projects could generate total revenue of RM62.0 mln over the 10-year period. Total investment cost is estimated at RM4.8 mln. (The Edge Daily)

• Harn Len Corp Bhd has proposed to take over as the exclusive contractor for five of its plantation units, allowing it to develop and manage their oil palm plantations for 25 years. Under related party agreements signed today, Harn Len would assume an estimated cost of RM46.0 mln in exchange for the share of fresh fruit bunch (FFB) production. The cost would be settled via a cash payment of RM19.0 mln on a deferred basis, and FFB entitlement sharing agreed between Harn Len and the respective companies. (The Edge Daily)

Source: Mplus Research - 28 Mar 2018