Upsides Remain Elusive

• The FBM KLCI bucked the positive sentiment across global stockmarkets amid fresh weakness in crude oil prices ,coupled with the unabated foreign fund outflow as the key index closed 0.1% lower despite recouping most of its intraday losses yesterday. The lower liners closed mostly higher as the FBM Small Cap and FBM Fledgling added 0.7% and 0.2% respectively, while the broader market ended mixed.

• Market breadth was slightly positive as advancers nudged decliners on a ratio of 477-to-444 stocks. Traded volumes, however, fell 4.0% to 2.77 bln share on signs of profit taking activities.

• Key losers on the FBM KLCI were Press Metal (-11.0 sen), KLCC (-10.0 sen), Sime Darby Plantations (-10.0 sen), Petronas Dagangan (-8.0 sen) and Telekom (-7.0 sen). Significant decliners on the broader market were Dutch Lady (-70.0 sen), Rapid Synergy (-23.0 sen), Batu Kawan (- 18.0 sen) and Hong Leong Industries (- 18.0 sen). MyEG sank 17.5 sen after its contract for foreign workers Rehiring Programme will be terminated by end of June 2018.

• On the flipside, notable advancers on the broader market were BAT (+RM1.62), MPI (+50.0 sen), Panasonic (+46.0 sen), QL Resources (+28.0 sen) and Top Glove (+22.0 sen). Meanwhile, MISC (+18.0 sen), AmBank (+16.0 sen), RHB Bank (+16.0 sen), Petronas Chemicals (+12.0 sen) and IHH (+8.0 sen) topped the big board advancers list.

• Tracking the positive developments on Wall Street on last Friday, Asian benchmark indices rebounded as the Nikkei jumped 1.4% on gains in automotive and shipping companies. The Hang Seng Index surged 1.7%, while the Shanghai Composite (+0.5%) extended its gains. ASEAN indices, meanwhile, closed mostly higher on Monday.

• Wall Street advanced for the third straight session yesterday as the Dow climbed 0.7% to close at its highest level since mid-March 2018 as the impressive strength in its economy offset the concern over the prospects of a trade war. On the broader market, the S&P 500 added 0.5%, while the Nasdaq (+0.7%) closed above the 7,600 psychological level.

• Earlier, European benchmark indices – the FTSE (+0.5%), CAC (+0.1%) and DAX (+0.4%) all extended their gains as concern over political uncertainty in Spain and Italy calmed down. Meanwhile, the Eurozone’s Producer Price Index (PPI) rose 2.0% Y.o.Y in April 2018 – the slowest expansion since December 2017.

The Day Ahead

• Malaysian stocks appeared to have lost momentum yesterday after two sessions of gains to leave the key index to close in an indifferent mode. Follow through buying was also largely absent yesterday as bouts of selling by foreign funds tempered the upsides.

• As it is, the market is finding it difficult to sustain a meaningful recovery as gains are met by the continuing foreign selldown, a trend that has continued since the conclusion of GE 14 amid concerns over the country’s fiscal position under a new government.

• Therefore, we think the key index’s gains will remain difficult to come by despite the continuing positivity in many global indices as the upsides could be met by the continuing foreign selling. Under the prevailing environment, we think the market could instead trend sideways and potentially build up a base around the 1,750-1,770 level. At the same time, there are few noteworthy domestic leads for market players to follow with the recently concluded results reporting season still showing weak earnings growth.

• The lower liners and broader market shares, meanwhile, may have found support after their prolonged weakness spell, but with fresh buying still elusive the upsides will continue to be measured for now.

Company Brief

• My E.G. Services Bhd (MyEG) has clarified that the news articles which appeared to insinuate the termination of an ad hoc rehiring management contract related to the illegal foreign workers in Malaysia were inaccurate and misleading, as the project adhered to its existing prescribed deadlines.

• To recap, the group had received a notification letter from the Home Affairs Ministry in relation to the extension of the project until 31st December 2017 instead of 15th August 2016.

• Consequently, new registration under the project had ceased since December 2017 in accordance to the aforementioned notification letter from the Home Affairs Ministry. The group also clarified that the 30th June 2018 closing date as stated in the news articles "is the grace period to allow all remaining registrants to complete all pending procedures under the project". (The Edge Daily)

• Green Packet Bhd aims to return to profitability this year, driven by growth in its core business of solutions and communications. The group is targeting a double-digit growth for its 2019 turnover and earnings which will be driven by new, as well as existing businesses.

• The group expects to see single-digit growth for its existing business, while the new businesses like fintech and Internet of Things should post doubledigit growth. (The Edge Daily)

• Tien Wah Press Holdings Bhd has plans to widen its customer base in Vietnam, by utilising its existing capacity to serve the food packaging industry there. This includes the printing of Heineken beer labels and mooncake packaging, which may be commissioned as early as this year. (The Edge Daily)

• Wah Seong Corp Bhd Group Chief Executive Officer (CEO), Chan Cheu Leong has increased his shareholding in Handal Resources Bhd to 10.5% (or 16.8 mln shares) after acquiring 1.2% (or 200,000 shares) on 1st June 2018. (The Edge Daily)

• After a series of delays in project execution, Berjaya Land Bhd (BLand) has decided to divest its investment in a Vietnamese financial centre project at a loss. Subsequently, the group is planning to sell its entire 32.5% of total capital contribution in Berjaya Vietnam Financial Center Ltd (BVFC Ltd) to local firms Vinhomes Joint Stock Co and Can Gio Tourist City Corp for 884.9 bln Vietnamese Dong (RM154.9 mln) cash, which will result in an estimated loss of about RM25.1 mln. (The Star Online)

• Cymao Holdings Bhd plans to sell two parcels of industrial land for RM12.0 mln cash. Cymao has inked a sale and purchase agreement (SPA) with South Pacific Fish Processing Sdn Bhd for the disposal, following the closure of Cymao’s mill. The sale will enable the group to unlock the value of land and increase funds for the group’s working capital needs. (The Edge Daily)

• WCT Holdings Bhd has aborted its proposal to grant share options to its Independent Non-executive Directors after considering feedback received from shareholders and stakeholders as well as the Independent Non-executive Directors.

• As such, the proposed share options deal will not be put forward for voting in Wednesday’s annual general meeting. (The Edge Daily)

• LBS Bina Group Bhd has an alternative plan for its development project in Zhuhai, China although the jointdevelopment deal with NWP Holdings Bhd did not materialise after both parties failed to come to an agreement with regard to certain terms in the Definitive Agreement.

• The group has assured that the project will not be put on hold because of the termination of the partnership with NWP Holdings and that it is in the midst of finalising the project planning. (The Edge Daily)  

Source: Mplus Research - 5 Jun 2018