More Of The Same Sideway Trend

• The FBM KLCI edged into the negative territory in the eleventh hour due to selling-pressure on selected banking heavyweights and continued weakness in energy prices. The lower liners, however, clawed back earlier losses, closing in green while the majority of the broader market retreated.

• Market breadth was negative as decliners beat advancers on a ratio of 488-to-404 stocks. Traded volumes also fell 15.6% to 2.62 bln shares due to holiday-thinned trading.

• Banking giants that dominated the losing team include Hong Leong Financial Group (-48.0 sen), Public Bank (-26.0 sen) and CIMB (-11.0 sen), followed by Petronas Gas (-12.0 sen) and Nestle (-10.0 sen). Meanwhile, broader market decliners were sin-stocks like Heineken Malaysia (- 58.0 sen), Carlsberg (-26.0 sen) and BAT (-20.0 sen). Other losers include Alliance Bank (-22.0 sen) and Bintulu Port Holdings (-19.0 sen).

• Glove-makers like Top Glove (+98.0 sen) and Kossan Rubber Industries (+36.0 sen) led the broader market, alongside KESM Industries (+RM1.00), Dutch Lady (+82.0 sen) and Ajinomoto (+32.0 sen). On the key-index, Petronas Dagangan (+18.0 sen), Axiata (+16.0 sen), Sime Darby Plantation (+15.0 sen), Ambank (+8.0 sen) and IHH Healthcare (+4.0 sen) rallied.

• Major Asian stocksmarkets shrugged off the global trade concerns, closing mostly higher ahead of several key central bank meetings this week. The Nikkei (+0.5%) recovered all of its losses last Friday, lifted by gains in retailers like Seven & I (+3.0%) and Family Mart (+2.8%). The Hang Seng Index (+0.3%) also extended its rally although the Shanghai Composite (-0.5%) was still southbound. ASEAN indices were broadly higher amid a mostly positive sentiment.

• Wall Street dismissed concerns of a potential fallout between the U.S. and its G-7 allies after a tumultuous G-7 meeting over the weekend, with markets closing higher on Monday as investors monitor the developments from the U.S.-North Korean summit in Singapore. The Dow ended marginally in green, while techrelated indices the S&P 500 (+0.1%) and the Nasdaq (+0.2%) finished with minor gains.

• Key European bourses, meanwhile, rallied as investors cheered Italy’s commitment to the Eurozone, calming fears of Italy’s potential divorce from the European bloc. The FTSE added 0.7%, on the back of the weakness in the Pound, which helped boost the share price of multinational companies. Meanwhile, Germany’s DAX (+0.6%) recouped its losses in the later session, closing higher alongside the CAC (+0.4%).

The Day Ahead

• Market conditions are likely to remain largely indifferent ahead of the upcoming Hari Raya break at the end of the week and we think many market players will be winding down some of their open positions. The sustained selling by foreign funds is also making it difficult for the key index to head higher as it provides further leeway for the foreign funds to sell into strength.

• Therefore, we think the FBM KLCI is poised for further sideway moves as the foreign selling is likely to be supported by local funds and this is likely to see the key index trending within the 1,770 and 1,780 levels for longer. Beyond the above levels, the 1,800 points level remains a formidable level to breach, while the 1,750 level will continue to serve as a major support.

• The lower liners and broader market shares are also seeing increasingly mixed trading environment, which is not surprising as profit taking activities are setting in ahead of the long weekend. We see a similar trend extending over the near term as the profit taking activities are likely to remain prevalent after last week’s gains.

COMPANY BRIEF

• Sapura Energy Bhd has made its ninth gas discovery offshore Sarawak, following the completion of its 2017 drilling campaign within the SK408 production sharing contract (PSC). The Pepulut-1 exploration well, located offshore Bintulu, Sarawak in Block SK408 was drilled and encountered high quality reservoir.

• The discovery is also another significant milestone for Sapura Energy following the recent announcement of its development plans for Gorek, Larak and Bakong fields as Phase 1 in the SK408 PSC. Sapura E&P is the exploration operator with its partners Petronas Carigali Sdn Bhd and Sarawak Shell Bhd. (The Sun Daily)

• RHB Bank Bhd is aiming to increase its financing for small and medium enterprises (SMEs) from 16.0% of the bank's domestic financing to 20.0% by 2022. The increment will be boosted by its launch of the RHB SME Financing portal, which enables customers to apply for SME term loans online within 10 minutes with minimal data inputs and obtain financing within five working days.

• Through the online platform, RHB targets to approve RM100.0 mln in SME loans over the course of a year. (The Edge Daily)

• Bina Darulaman Bhd has won a oneyear extension of its state road maintenance contract with the Kedah government worth RM70.0 mln. The Public Works Department (JKR) has agreed to pay BDB Infra for the work to be undertaken in the Kota Setar/Padang Terap, Kuala Muda/Sik, Kubang Pasu, Kulim/Bandar Baharu, Pendang/Yan and Baling districts. (The Edge Daily)

• Daya Materials Bhd, a Practice Note 17 (PN17) company, plans to submit its regularisation plan to Bursa Malaysia by August 2018. The company is finalising the appointment of the principal adviser and will discuss with the stakeholders before submitting its regularisation plan to Bursa ahead of the February 2019 deadline. (The Edge Daily)

• Metronic Global Bhd was awarded a 4.7 mln Saudi Arabian riyals (RM5.0 mln) in an adjudication proceeding against Ahmad Zaki Resources Bhd. The claim is in relation to disputes over nonpayment for works done and costs incurred by Metronic Engineering for the Al Faisal University Campus Development Project in Riyadh, Saudi Arabia. (The Edge Daily)

• Gas Malaysia Bhd has appointed Sharifah Sofia Syed Mokhtar Shah, the 24-year-old daughter of tycoon Tan Sri Syed Mokhtar Al-Bukhary, to its board as a Non-Executive Director. Her appointment is effective 11th June 2018. Sharifah Sofia also sits on the boards of four other companies linked to her father, namely DRB-Hicom Bhd, Pos Malaysia Bhd, Malakoff Corporation Bhd and MMC Corporiation Bhd. (The Edge Daily)  

Source: Mplus Research - 12 Jun 2018