Taking A Fresh Stab At 1,880

• The FBM KLCI rose 0.6% on Monday, boosted by the last-minute spike in selected large caps. The lower liners however, closed on a downward bias – led by the FBM Ace (-1.3%). The broader market, meanwhile, was mostly higher, with the exception of technology and mining-related stocks.

• Market breadth was slated towards the negative side as losers beat the winners on a ratio of 518-to-370 stocks. Traded volume fell marginally by 1.4% to 2.68 bln shares amid selling pressure in the lower liners.

• Top gainers on the blue-chip gauge include Petronas Dagangan (+60.0 sen), Genting Malaysia (+22.0 sen), Telekom Malaysia (+21.0 sen), Nestle (+10.0 sen) and PPB Group (+10.0 sen). Meanwhile, broader market advancers were Dutch Lady (+76.0 sen), SP Setia (+21.0 sen), Panasonic Manufacturing (+20.0 sen), Ajinomoto (+18.0 sen) and KESM Industries (+18.0 sen).

• On the downside, Negeri Sembilan Oil Palm (-20.0 sen), DKSH Holdings (-17.0 sen), Aeon Credit (-12.0 sen), Kossan Rubber (-12.0 sen) and Lotte Chemical Titan (-11.0 sen) weighed on the broader market. The only five decliners on the Main Board were Genting (-5.0 sen), Maxis (-3.0 sen), Hong Leong Bank (-2.0 sen), IHH Healthcare (-2.0 sen) and Petronas Gas (-2.0 sen).

• Key regional benchmark indices traded lower, dragged down by concerns on the extended weakness in the Hong Kong Dollar following foreign outflows. The Shanghai Composite index narrowed 1.5%, alongside the Hang Seng (-1.6%) owing to losses in real estate-related companies. The Nikkei (+0.3%), however, eked out gains after a volatile session, supported by a resilient Greenback and gains in defensive stocks. ASEAN stockmarkets were mostly positive at yesterday’s close.
• Wall Street rallied on Monday, buoyed by gains in technology and healthcare stocks as the corporate results season gets underway. The Dow rose 0.9%, on the back of gains in United Health (+2.7%), while the S&P 500 gained 0.8%. The Nasdaq (+0.7%) also advanced, closing slightly above the 7,156 psychological level.
• European benchmark bourses were mainly lower, weighed down by lingering geopolitical uncertainties due to the U.S.- led missile strikes on the Syrian regime last weekend. The weakness in ad giant WPP (-6.5%) pulled the FTSE (-0.9%) lower following the resignation of its long-serving Chief Executive Director amid personal misconduct allegations. The DAX also finished lower by 0.4%, although the CAC closed unchanged.

THE DAY AHEAD

• While we expected the key index to head higher yesterday, the last minute haul on selected index linked stocks helped the key index to post the stronger gains, which is again sending the key index valuations tethering on the expensive side.

• After yesterday’s gains, however, we think the market could turn more tentative as it approaches the 1,880 points resistance, which we continue to see as a major hurdle. Although we think the level could be tested, we remained unconvinced that the level will be breached convincingly as there are still few sustainable catalyst and a pick-up in earnings growth to support the upsides.

• Therefore, we think choppiness could setin as the key index approaches the above level. Beyond the 1,880 level, there is resistance at the 1,886 level, while the immediate support is at 1,870.
• The lower liners and broader market shares, meanwhile, could continue to see some bargain hunting activities, albeit we think the general market environment is still cautious and quick profit taking activities could still temper the performance of the above stocks in the near term as market players await for the General Election. MACRO BRIEF
• Malaysia's unemployment rate fell 0.1% M.o.M to 3.3% in February 2018. Meanwhile, the unemployment rate also decline 0.2% Y.o.Y in the February 2018. According to the Department of Statistics (DoS), 31.8% or 7.1 mln of working age population (15-64 years), were outside the labour force in February 2018. The group comprised housewives, students, retirees and those who were not interested to work. (The Edge Daily)

COMPANY BRIEF

• IHH Healthcare Bhd reported that the Board of Directors of India's Fortis Healthcare Ltd has indicated their inability to engage with IHH regarding its takeover offer. IHH also confirmed that it had, on 11th April 2018, issued a strictly non-binding letter to the board of Fortis expressing IHH’s interest to participate in Fortis and its affiliates in a suitable manner. (The Edge Daily)

• Supptech Holdings Sdn Bhd, the largest shareholder of ACME Holdings Bhd has continued to pare down its stake in the company with another off-market trade. Supptech sold 41.9 mln shares, representing an 18.2% stake, to Inspire Sense Sdn Bhd in an off-market transaction on 11th April 2018.
• The block of shares was exchanged at 34.0 sen per share, a 0.5 sen premium to its closing price of 33.5 sen per share. The stake exchange cut Supptech’s interest in ACME to 20.1%. The acquisition made Inspire Sense the third largest shareholder in ACME. (The Edge Daily)
• Kelington Group Bhd has secured new orders worth RM77.5 mln in 1Q2018, bringing the group’s total outstanding orderbook to RM267.3 mln. The group is also bidding for new projects worth RM500.0 mln across its key operating markets. Some 85.0% of the new orders came from the ultra-high purity segment for the company to provide specialised engineering services for the semiconductor and electronic manufacturing companies. Most of the new contract wins were mainly contributed from China, followed by Malaysia, Singapore and Taiwan. (The Edge Daily)

• NWP Holdings Bhd has terminated an agreement to buy a 30.0% stake in U.S.- incorporated Aviation AI Inc (AAI). Back in 14th October 2016, NWP has proposed to buy a stake in AAI to venture into the private charter air transport services business with the intention of increasing its income. (The Edge Daily)

• Southern Steel Bhd has appointed Datuk Ahmad Johari Abdul Razak as an Independent and Non-Executive Director, effective 16th April 2018. Meanwhile, Soon Seong Keat, who previously held a Non-Independent, Non-executive Directorship, has resigned after taking into consideration the provisions of the Malaysian Code on Corporate Governance.

• Datuk Ahmad Johari is caretaker Prime Minister Datuk Seri Najib Razak’s brother and is currently an Executive Director of Ancom Bhd. He is also the Independent and Non-Executive Chairman of Daiman Development Bhd. (The Edge Daily)

Source: Mplus Research - 17 Apr 2018