Indifferent Trend To Persist

• The FBM KLCI (-0.03%) flatlined after clawing back earlier losses amid continued foreign outflows and the weakening Ringgit. Most of the lower liners were downward pressured, with the exception of the FBM Small Cap (+0.3%). The majority of the broader market shares, however, strengthened yesterday.

• Market breadth remained negative as decliners beat advancers on a ratio of 469-to-397 stocks. Traded volumes also declined by 10.2% to 2.12 bln shares in the absence of fresh trading impetus.

• O&G-related titans like Petronas Dagangan (-52.0 sen) and MISC (-24.0 sen) fell, dragged down by the recent weakness in energy prices, alongside Nestle (-RM1.00), Public Bank (-22.0 sen) and Hong Leong Financial Group (-10.0 sen). The broader market losers were Panasonic Manufacturing (-50.0 sen), BAT (-40.0 sen), Carlsberg (-22.0 sen), Malaysian Pacific Industries (-18.0 sen) and VS Industry (-17.0 sen).

• Broader market advancers include Supermax (+32.0 sen), United Plantations (+32.0 sen), Magni-Tech (+29.0 sen), UMW Holdings (+32.0 sen) and Amway (+20.0 sen). Genting Malaysia (+10.0 sen) and Genting (+4.0 sen) advanced, followed by other key-index peers like Petronas Gas (+46.0 sen), Sime Darby Plantation (+12.0 sen) and YTL Corporation (+4.0 sen).

• Key regional benchmark stockmarkets finished mostly lower, amid risk-off sentiments as investors await the upcoming central bank meetings. The Nikkei (+0.4%) was an exception as it rose for the third consecutive day, boosted by shippers and real estate stocks. The Shanghai Composite (-1.0%) and the Hang Seng Index (-1.2%), however, retreated together with most of the ASEAN stockmarkets.

• Major U.S. equities shaved its gains to close lower in the final hour after a widely anticipated move by the Federal Reserve to hike interest rates by 25 bp with two more increases expected to follow by the end of the year. Media-related stocks capped the losses on the Dow (-0.5%), amid M&A developments. The S&P 500 also erased 0.4%, alongside the Nasdaq (- 0.1%), albeit slightly offset by gains in Netflix and Amazon.

• Key benchmark European indices closed mostly in the red as investors took to the sidelines ahead of key monetary decisions, including clues on future rate hikes by the U.S. Federal Reserve. The FTSE lost its momentum in the second half of the session, weighed down by losses in online food delivery provider Just Eat (-4.7%) amid tightening competition, while the CAC flatlined. The DAX, however, bucked the general downtrend to close 0.4% higher on Wednesday.

The Day Ahead

• Although the key index managed to claw back most of its intraday losses, the market undertone is still largely indifferent and it was the support of domestic institutions that offset the still prevalent foreign selloff.

• We see little change to the immediate market outlook as there is still no change to the market environment that will still be wary of the country’s fiscal position as well as the corporate earnings outlook. The wariness will be further compounded by rising U.S. interest rates that could dampen the demand for goods and services. Also, market interest is expected to wane in a shortened trading session ahead of the Hari Raya break. Therefore, we see the key index remaining rangebound on the back of the continuing local institutional support that could keep it lingering within the 1,760 and 1,770 levels.

• We also expect retail participation to wane ahead of the holidays, but we see most lower liners and broader market shares to remain rangebound.

COMPANY BRIEF

• Gas Malaysia Bhd is imposing a surcharge of 77 sen, raising the gas tariff to RM23.80 per mln British Thermal Units from 1st July 2018 after. This came after Gas Malaysia received the go-ahead from the Energy Commission to raise the surcharge under the mechanism for the tariffs following the global increase in gas prices.

• The above increase is an incentive based regulation (IBR) framework that sets the base tariff for a regulatory period of three years from January 2017. The IBR allows changes in the gas costs to be passed through via the Gas Cost Pass Through mechanism every six months. (The Star Online)

• Supermax Corporation Bhd has announced that its 70.0%-owned Japanese unit, Aime Supermax KK has been granted the product licence for its contact lenses by the Pharmaceutical and Medical Device Authority of Japan. The product licence effectively enables the Supermax Group via SuperVision Optimax Sdn Bhd to export the first Malaysian brand contact lens to Japan. (The Edge Daily)

• EA. Technique (M) Bhd has been awarded a contract by Petronas Carigali Sdn Bhd for the provision of a unit of Fast Crew Boat for Petroleum Arrangement Contractors (PACs) Production Operations, shared between Petronas Carigali and EnQuest Petroleum Production Malaysia Ltd.

• The job will start in July 2018 and the services shall be performed on ‘Call-Out basis via an order at an agreed fixed schedule of rates to be shared between the sharing PACs. (The Edge Daily)

• Enra Group Bhd is acquiring International Chemicals Engineering Pty Ltd (ICE), an Australian company involved in importing and distributing specialty chemicals in Australia and New Zealand. The acquisition price will be a cash consideration of up to A$2.9 mln (RM8.7 mln) and the assumption of A$1.6 mln of existing shareholders’ loans in ICE. The aggregate of these amount to A$4.5 mln (RM13.5 mln). (The Edge Daily)

• Petra Energy Bhd has received a oneyear extension on its contract to 20th May 2019 from Petronas Carigali Sdn Bhd for the provision of hook-up, commissioning and topside major maintenance services. The contract was previously awarded to Petra Energy by Petronas Carigali for duration of five years from 21st May 2013 to 20th May 2018. No contract value, however, was disclosed. (The Edge Daily)

• GFM Services Bhd has won a four-year contract worth RM33.4 mln from Pertubuhan Keselamatan Sosial (PERKESO) to provide integrated facilities management (FM) services for PERKESO’s Rehabilitation Centre in Malacca through an open tender. The contract is for a period of four years, commencing June 2018 until June 2022. (The Edge Daily)

• The Inland Revenue Board (IRB) has appealed against a High Court order dismissing a RM26.3 mln tax claim against a unit of Mega First Corp Bhd.

• In October 2016, the IRB had sent notices to Mega First’s subsidiary Idaman Harmoni Sdn Bhd (IHSB) over additional taxes arising from the sale of a joint venture property in 2004. IRB argued the disposal was subject to income tax as it said the transaction was treated by IHSB as a capital transaction, which was liable to real property gains tax. (The Edge Daily)  

Source: Mplus Research - 14 Jun 2018