Market Interest To Taper

• The local index ended the week on a softer footing, in-tandem with the bearish sentiments on the offshore stockmarkets which was weighed down by renewed concerns of rising borrowing costs. On a weekly basis, however, the local index gained 1.2% W.o.W to close higher at 1,778.3 points. All the lower liners retreated, led by the FBM Small Cap (- 0.6%), while the broader market followed suit.

• Market breadth turned bearish as losers overtook winners on a ratio of 537-to-415 stocks. Traded volumes also fell 23.8% to 3.10 bln shares on profit-taking activities ahead of the Hari Raya holidays this week.

• Top losers on the key-index include Nestle (-90.0 sen), Petronas Gas (-30.0 sen), Public Bank (-20.0 sen), Sime Darby Plantation (-14.0 sen) and Genting (-8.0 sen). Other consumer stocks like Heineken Malaysia (-70.0 sen) and Ajinomoto (-22.0 sen) also weakened, alongside Pharmaniaga (-32.0 sen), Globetronics (-22.0 sen) and Litrak (-16.0 sen).

• On the bright side, sin-stocks like BAT (+38.0 sen) and Carlsberg (+20.0 sen) bucked the general downtrend, followed by Dutch Lady (+60.0 sen), Malaysian Pacific Industries (+28.0 sen) and Cahya Mata Sarawak (+24.0 sen). Meanwhile, blue-chip chart toppers were Hong Leong Financial Group (+6.0 sen), KLCC (+6.0 sen), Tenaga Nasional (+6.0 sen), Hap Seng Consolidated (+5.0 sen) and Astro (+4.0 sen).

• Key regional benchmark indices snapped their streak of several sessions of gains on the back of profit-taking activities ahead of the U.S. Federal Reserve meeting next week. The Nikkei (-0.6%) ended its four-day winnings – due to losses in banking and technology counters. Similarly, the Shanghai Composite extended its losses, falling 1.4% as investors digested the series of Chinese trade data, while the Hang Seng Index (-1.8%) also closed lower. ASEAN indices, meanwhile, finished on a dour tone.

• U.S. equities closed with meagre gains ahead of the G-7 summit between U.S. and its major allies as well as the historic meeting with North Korea’s leader Kim Jong Un. The Dow (+0.3%) rose for the third-straight session, lifted by the strength in consumer staples stocks like Procter & Gamble (+1.9%). Meanwhile, the S&P 500 and the Nasdaq also closed in the positive territory with 0.3% and 0.1% gains respectively.

• Earlier, European benchmark indices weakened as investors retreated to the sidelines, pressured by renewed worries of a potential global trade war and several major global events set to take place this week. U.K’s blue-chip benchmark the FTSE (-0.3%) closed lower for the third consecutive week as miners and banking titans declined. The DAX lost 0.4% on softer-than-expected industrial data, while the CAC flatlined.

The Day Ahead

• Last Friday’s profit taking was very much to form after the key index’s successive sessions of gains. However, it also appears that the 1,800 points level is still a formidable level to clear amid the continuing cautiousness over the state of the country’s fiscal position, coupled with the sustained selldown by foreign funds.

• Collectively the above issues are making it difficult for the FBM KLCI to sustain a firmer recovery and we think the market could instead veer sideways ahead of the upcoming Hari Raya break. As it is, local institutions will continue to provide support to counter some of the foreign selling. Nevertheless, fresh buying is still tentative as the recent corporate results are still broadly on the anemic side and are providing few fresh catalysts. Therefore, we expect the 1,800 points level to remain as the big hurdle for now. In the interim, there is resistance at the 1,780-1,790 levels. The supports are at 1,770 and 1,750 respectively.

• The lower liners and broader market shares could also face further profit taking action amid the lack of fresh leads and ahead of holiday-shortened week that could see retail interest ebbing.

COMPANY BRIEF

• Dialog Group Bhd’s unit is acquiring the remaining 20.0% interests in Langsat Terminal (One) Sdn Bhd and Langsat Terminal (Two) Sdn Bhd from Puma Energy Asia Pacific BV for a total of RM62.6 mln. The company is buying Langsat One for RM43.0 mln and Langsat Two for RM19.6 mln.

• As part of the deal, its wholly-owned subsidiary, Dialog Terminals Sdn Bhd will take over Puma’s portion of shareholder’s loan to both the terminals, including principal and accrued interest of RM24.3 mln and RM8.1 mln respectively. The two Langsat terminals are principally engaged in the provision of centralised tankage and tank terminal facilities to the O&G and petrochemicals industry. (The Star Online)

• Axiata Group Bhd has appointed Lisa Lim Poh Lin as the group’s director to further strengthen its board diversity mix and expertise. Lim has more than 18 years’ experience in management consulting, academic research and investment management. She holds a PhD in engineering from Cambridge University, a recipient of Malaysian Public Services Commission scholarship and The Cambridge Commonwealth Trust Scholarship and also a Certified Financial Analyst charterholder. (The Star Online)

• MISC Bhd has secured a US$645.0 mln (RM2.57 bln) long-term charter contract to own and operate four specialist tankers from Petróleo Brasileiro S.A. – Petrobras of Rio de Janeiro, Brazil (Petrobras). Four 152,000 DWT DP2 shuttle tankers will be built by a Korean shipyard for delivery in 2020. These new vessels will be in addition to the two AET DP2 ships currently on charter in the Brazilian Basin for Petrobras. (The Star Online)

• Nova MSC Bhd’s wholly-owned subsidiary, novaCITYNETS Pte Ltd (NCN) has been awarded a tender by the Public Utilities Board in Singapore for a contract sum of about RM15.4 mln. Under the contract, NCN will supply, deliver and implement a building information modelling checking systems for building plan submission for about 20 months and thereafter maintain the project for the next 20 months. (Bernama)

• Eco World International Bhd and Willmott Dixon Holdings Ltd have officially launched EcoWorld London at the Institute of Directors, Pall Mall in London. The launch will see the two companies delivering over 10,000 much-needed new homes across London and the South East. Under the new joint venture, EcoWorld London will be developing 12 sites in Greater London and the South East of England with an estimated GDV of over £2.60 bln (RM13.90 bln). (The Edge Daily)

• UOA Real Estate Investment Trust (UOA REIT) is disposing of Wisma UOA Pantai to CIMB Bank Bhd for RM120.0 mln. The disposal is expected to be completed by 2Q2018. (The Edge Daily)

• Datuk Faruk Othman has ceased to be a substantial shareholder in APFT Bhd after disposing of a 0.8% stake in the flight training company. Faruk had sold 10.8 mln shares in the company on 5th June 2018 through a direct business transaction. (The Edge Daily)

• Asdion Bhd’s 49.0%-owned associate, Renox Stainless Steel Co Ltd has obtained the right to distribute automotive clean-in-place (CIP) equipment for the food and beverage industry in Indo-China for three years. Asdion said Renox had entered into an agreement with Thai turnkey engineering solution firm Engisoul Co Ltd for the CIP equipment distributor right. (The Edge Daily)

• Lien Hoe Corp Bhd’s Executive Director. Christine Yap Tse Yeeng has been redesignated as Chief Executive Officer of the company effective immediately. Tse Yeeng is the daughter of Lien Hoe's Managing Director and substantial shareholder, Datuk Yap Sing Hock. (The Edge Daily)

• My EG Services Bhd has launched Volvo Car Leasing, a leasing service that will let customers enjoy stress-free Volvo ownership, minus the usual financial strain of a hire-purchase agreement. The launch follows the Leasing Service Agreement signed between its subsubsidiary My EG Finance Technologies Sdn Bhd (MyEG Fintech) and Volvo Car Malaysia Sdn Bhd on 2nd May 2018.

• Volvo Car Leasing is the first for Volvo Cars in Southeast Asia and it offers customers an opportunity to drive a Volvo, worry-free with the insurance, road tax, maintenance cost and warranty covered. (The Edge Daily)  

Source: Mplus Research - 11 Jun 2018