Stuck In A Rut

• The FBM KLCI (-0.3%) started off the week on a frail note as the key index erased most of its previous session’s gains on weakness in selected banking heavyweights. On a similar note, the lower liners – the FBM Small Cap (-0.3%), FBM Fledgling (-0.01%) and FBM ACE (- 1.1%), all retreated after reversing from their intraday gains. Only the Industrial Products (+0.3%) and Technology (+0.2%) sector outperformed the negative broader market.

• Market breadth turned negative as decliners outpaced advancers ratio of 553-to-313 stocks. Traded volumes, however, added 13.8% to 2.08 bln amid the rotational play amongst the lower liners.

• More than two thirds of the key index constituents were in the red, led by Hong Leong Financial Group (-48.0 sen), followed by Petronas Dagangan (-18.0 sen), Telekom (-16.0 sen), Hap Seng (- 11.0 sen) and Public Bank (-10.0 sen). Consumer products stocks like Dutch Lady (-50.0 sen), BAT (-40.0 sen) and Panasonic (-30.0 sen) fell, while Heng Yuan and Alliance Bank declined 23.0 sen and 21.0 sen respectively.

• In contrast, significant advancers on the broader market include Far East Holdings (+64.0 sen), Top Glove (+36.0 sen), Caely (+19.0 sen), Batu Kawan (+16.0 sen) and Hartalega (+15.0 sen). Key winners on the FBM KLCI were Petronas Dagangan (+14.0 sen), Nestle (+10.0 sen) Genting (+7.0 sen), RHB Bank (+6.0 sen) and Press Metal (+4.0 sen).

• Asia benchmark indices were unable to hold on to their intraday gains yesterday as the Nikkei (-0.3%) sank into the negative territory, dragged down by the eleventh hour selling pressure. The Shanghai Composite fell 0.2% on lingering concern over a trade war with U.S., while the Hang Seng Index remained closed for the Easter Monday public holiday. ASEAN stockmarkets, meanwhile, closed mixed on Monday.
• U.S. stockmarkets started off 2Q2018 on a dour note as the Dow sank 1.9%to close below the 24,000 psychological level after technology shares selloff intensified. On the broader market, the S&P 500 slumped 2.2% with all 11 major sectors in the red, while the Nasdaq (- 2.7%) tumbled below the 7,000 psychological level.
• Meanwhile, European stockmarkets were closed for the East Monday public holiday.

THE DAY AHEAD

• Stocks on the local bourse looks frail amid the increasingly uncertain global equity market outlook and lack of domestic catalysts to entice market players. Therefore, we expect the dour market conditions to persist over the near term as market players assess their next course of action to weather the prevailing market uncertainties.

• The lower liners and broader market shares are also seeing reduced interest from retail players with the on-going market uncertainties continuing to dampen the near term outlook, which is further compounded by the retail players’ wariness over the upcoming General Election.

• Despite the prevailing uncertainties, however, there will still be bouts of support from institutional players to keep the key index broadly within the 1,850 and 1,870 levels over the near term, although there will be increased nearterm downside pressure that could send the key index to the 1,850 support first.

COMPANY BRIEF

• WCT Holdings Bhd is planning to acquire a 60.0% equity stake in Subang Skypark Sdn Bhd, the operator of the Skypark Terminal (formerly Terminal 3) of the Sultan Abdul Aziz Shah Airport in Subang, Selangor for RM44.6 mln cash. WCT is said to be buying the stakes from from Tan Sri Ravindran Menon and his partner Datuk Aisamar Kadil Mydin Syed Marikiah.
• The acquisition will enable WCT to invest in Subang Skypark, which the former believes has potential for value enhancement, as well as potential for development of the car park area into a mixed commercial development project. (The Star Online)

• Tenaga Nasional Bhd (TNB) has inked a new £120.0 mln (RM651.9 mln) financing facility with Bayerische Landesbank (BayernLB) to refinance its 80.0% equity stake in renewable energy companies GVO Wind Ltd and Bluemerang Capital Ltd held by its unit Tenaga Wind Ventures UK Ltd.

• The refinancing exercise was the first overseas non-recourse acquisition refinancing that TNB has undertaken through a wholly-owned subsidiary, highlighting that the exercise is the largest financing for medium-scale operational feed-in tariff (FiT) onshore wind portfolio. (The Edge Daily)

• Leweko Resources Bhd has signed a licensing agreement with India-based Shinde Developers Pte Ltd to allow the latter to use Leweko’s know-how and technology related to ultra-high performance cementitious composite technology.
• The contract includes Shinde’s right to manufacture, sell and export a list of products under the Dura brand name within India and other South Asian countries like Afghanistan, Bangladesh, Bhutan, Maldives, Nepal, Pakistan and Sri Lanka.
• Shinde will commence begin manufacturing within one year from the date of the execution of the licensing agreement, which will be valid for a period of 15 years. (The Edge Daily)

• GFM Services Bhd has secured a fiveyear contract worth RM51.8 mln from Sinar Uni-Resources Sdn Bhd to provide integrated facilities management (IFM) services to the Sabah state administration centre in Kota Kinabalu. The contract has commenced on January 2018. (The Edge Daily)

• Datasonic Group Bhd is acquiring a factory in Klang for RM18.9 mln to be used for smart card manufacturing. The factory is currently being built on 84,032.76 sq. ft. of freehold land. (The Edge Daily)

• Pasukhas Group Bhd (PGB) is proposing to diversify into property development and coal business in a bid to enhance its income stream. Consequently, the group and other joint-developers, Pasukhas Properties Sdn Bhd and Midtown Pearl Sdn Bhd will be undertaking the development of Lushwoods Towers and Residences upon approval from Dewan Bandaraya Kuala Lumpur.

• Further, the group has also proposed a special issue of up to 116.1 mln new shares or 12.5% of the company’s issued share capital to raise gross proceeds of up to RM13.9 mln (assuming the shares are issued at 12.0 sen apiece) for future expansion in its energy utilities services and power generation business. (The Edge Daily)

• Hibiscus Petroleum Bhd has completed the acquisition of a 50.0% participating interest in the North Sabah Enhanced Oil Recovery Production Sharing Contract (PSC) for US$25.0 mln (about RM96.4 mln) from Shell on 31st March 2018. The acquisition is expected to increase Hibiscus' oil production capability considerably. (The Star Online)

Source: Mplus Research - 3 Apr 2018