Choppiness To Set In

• The local key-index inched higher after lingering largely in the positive territory, following positive economic data from China and stronger crude oil prices. The lower liners - the FBM Ace (-0.7%) and the FBM Small Cap (-0.4%), however, extended their losses although the FBM Fledgling rose 0.2%. The broader market, meanwhile, was mostly splashed in the red with only three of ten subsectors in the black.

• Market breadth was negative as decliners still outweighed advancers on a ratio of 506-to-424 stocks. Traded volumes, however, gained 15.5% to 3.09 bln shares, dragged down by the extended selling-pressure in the lower liners.

• Significant Main Board advancers were Petronas Dagangan (+70.0 sen) and Petronas Gas (+54.0 sen), followed by Press Metal (+16.0 sen), Digi (+10.0 sen) and Genting (+9.0 sen). Meanwhile, Panasonic Manufacturing (+30.0 sen), Aeon Credit (+20.0 sen), Bursa Malaysia (+20.0 sen), Muda Holdings (+18.0 sen) and Lafarge Malaysia (+14.0 sen) outperformed the broader market.

• Refineries like Hengyuan Refining (-51.0 sen) and Petron Malaysia (-35.0 sen) were amongst the broader market losers, alongside KESM Industries (-54.0 sen), BAT (-34.0 sen) and Globetronics (-24.0 sen). Banking heavyweights which hit the key-index include Public Bank (-6.0 sen) and Ambank (-5.0 sen), followed by other decliners like Nestle (-RM1.10), Genting Malaysia (-18.0 sen), as well as Telekom Malaysia (-13.0 sen).

• Major Asian stockmarkets continued to close on a downward bias as investors digested a series of Chinese data. The Nikkei was flattish, weighed down by the strength in Yen. Meanwhile, better-thanexpected GDP growth from China momentarily boosted the Shanghai Composite Index (-1.4%) and the Hang Seng (-0.8%), although losses in techstocks after the U.S. banned American companies from selling components to China-based telecom equipment maker ZTE Corp weighed on Chinese indices later in the day. ASEAN stockmarkets were mostly negative on Tuesday’s close.

• U.S. equities finished broadly higher as investors cheered upbeat corporate earnings results as well as stronger economic data. The Dow (+0.9%) rallied, boosted by gains in United Health (+3.6%). On the broader market, Netflix supported the rally in the S&P 500 (+1.1%) and Nasdaq (+0.7%) after surging to its all-time high on stronger-thananticipated quarterly revenue.

• Earlier, European equities bourses booked its highest close in about seven weeks as investors shrugged off geopolitical concerns ahead of the quarterly corporate earnings season. The FTSE (+0.4%) reversed earlier losses on the weakness in the Pound after the U.K’s employment data underperformed analysts’ expectations. Meanwhile, Bayer (+1.1%) propped the DAX (+1.6%) higher after the former announced that its major shareholder Temasek is planning to increase its stake in the German drug maker. The CAC also ended 0.8% higher at 5,353.5 points.

The Day Ahead

• Although the key index is tethering at the 1,880 level, we continue to think that it is a formidable level to breach convincingly amid the lack of sustainable catalyst as well as the still meek market following to ensure that it stays ahead of the level. While there could still some lift to push the key index above the 1,880 level, we think they could be short-lived as profit taking activities could set in after the key index has gained more than 4.0% over the past two weeks.

• Therefore, we think choppiness could prevail as the key index continues to tether at its major hurdle over the near term. Above the 1,880 level, there is resistance at the 1,886 level, while the near term support is at 1,870.

• Meanwhile, the bargain hunting activities on the lower liners and broader market shares are also thinning amid the lack of fresh leads. This could continue to weight on the above stocks for longer as retail players are still cautious ahead of the upcoming General Election.

COMPANY BRIEF

• Bumi Armada Bhd’s unit, Bumi Armada (Singapore) Pte Ltd (BASPL) has been hit by a suspension of its Armada Perdana floating production storage and offloading (FPSO) unit by Erin Petroleum Nigeria Ltd (EPNL). BASPL also received a notice of seizure/attachment of goods from a third party informing that the entire crude oil produced and to be produced and stored in Armada Perdana has been seized/attached by a writ of attachment of the Federal High Court, Lagos.

• The estimated financial impact of credit risk recovery for Bumi Armada group to the results for 2018 is approximately RM30.0 mln. Bumi Armada is reviewing its legal options, including commencement of legal proceedings against EPNL to uphold the contractual rights of AOL and BASPL under the contracts. (The Star Online)

• SHH Resources Holdings Bhd’s 80% owned Rampai Pesona Sdn Bhd has agreed to buy 2.0-ha of freehold land in Kajang, Selangor for RM10.2 mln from Rising Charm Sdn Bhd. The land has been earmarked for residential use. (The Star Online)

• Malaysia Marine and Heavy Engineering Holdings Bhd (MHB) will spend about RM150.0 mln on capital expenditure in 2018 to build a dry dock facility. The dry dock is currently 15.0% complete and is slated for completion by 2Q2020. (The Edge Daily)

• Inta Bina Group Bhd has bagged a RM97.8 mln contract to build two apartment blocks and a basement carpark in Damansara Damai, Selangor. The contract is for a period of 23 months. (The Edge Daily)

• Zelan Bhd is facing a 15.2 mln dirham (RM16.1 mln) arbitration claim by Hitachi Ltd over a deal in the United Arab Emirates. The action was initiated over disputes relating to a sub-contract signed in 2012 for the supply and installation of a water cooled chiller package for the Meena Plaza mixed-use development project in Abu Dhabi. (The Edge Daily)

• BSL Corp Bhd has failed again in its second appeal to the Ministry of Finance for the remission of two bills of demand from the Royal Malaysian Customs Selangor (RMCS) amounting to RM11.1 mln. (The Edge Daily)  

Source: Mplus Research - 18 Apr 2018