Trying To Find A Footing

• The FBM KLCI logged-in its sixth-straight session of losses as investors digested a series of monetary announcements from global central banks as well as the sharp fall in Ringgit amid ongoing trade tensions between Washington and its allies. The lower liners were splashed in red, with the exception of the FBM ACE (+0.04%) index. Meanwhile, the broader market constituents were not unscathed as all but the Technology (+0.1%) sector closed lower on Monday.

• Market breadth was negative with 583 losers vs. 304 winners, although traded volumes grew by 17.9% to 1.91 bln shares on the first day of post-holiday trading.

• Nestle (-RM1.00), Petronas Dagangan (- 82.0 sen), Kuala Lumpur Kepong (-64.0 sen), Hong Leong Bank (-34.0 sen) and Axiata (-32.0 sen) dominated to the keyindex decliners’ list. Broader market losers, meanwhile, include Dutch Lady (- 50.0 sen), Heineken Malaysia (-48.0 sen), Hong Leong Industries (-42.0 sen), KESM Industries (-30.0 sen) and Allianz Malaysia (-24.0 sen).

• On the flipside, consumer productsrelated counters like Fraser & Neave (+40.0 sen), Ajinomoto (+38.0 sen) and Panasonic Manufacturing (+28.0 sen) supported the gains in the broader market, alongside Pos Malaysia (+22.0 sen) and Apex Healthcare (+19.0 sen). Less than half of the Main Board constituents closed higher on Monday. Amongst the advancers were MISC (+20.0 sen), Hong Leong Financial Group (+10.0 sen), KLCC (+7.0 sen), Petronas Chemicals (+4.0 sen) and giant glove maker Hartalega (+1.0 sen), on the back of bargain-hunting activities following recent decline.

• Japanese equities finished mostly in the red after Japan notched its first trade deficit in three months, due to a spike in imports of aircraft and aircraft parts from the U.S. The Nikkei fell 0.8%, despite recovering some of its earlier losses. Elsewhere in Asia, Chinese and Hong Kong stockmarkets were closed for holidays, while the majority of the ASEAN stockmarkets retreated at Monday’s close.

• Wall Street finished mostly in the red as the Dow (-0.4%) extended its losing streak for the fifth day in a row amid trade concerns. Losses in telecomrelated counters weighed on the S&P 500 (-0.2%), although the Nasdaq pared earlier losses and closed marginally in the green, boosted by Amazon (+0.5%).

• Earlier, U.K. stockmarkets outperformed its European peers despite closing in the red as losses were capped by the strength in Pound and gains in energy stocks. The FTSE (-0.03) flatlined, while the DAX weakened by 1.4% amid uncertainties in its political landscape. The CAC also closed 0.9% lower after lingering in the negative territory for the entire intraday session.

The Day Ahead

• The selloff in emerging market shares yesterday took the wind out the sail of many regional indices that were also reeling from the heighten threat of a trade war between the U.S. and China. Malaysia stocks were similarly affected by the above events that have also left the key index below the critical 1,750 support level.

• Investor sentiments remain downtrodden as the trade war concerns have yet to abate, whilst domestic leads are also few and in-between to provide the market with a meaningful bounce back opportunity. Hence, we see little impetus for the market to stage a strong comeback and the market could instead try to build up another base around the 1,740-1,750 level with local institutions providing some support. The other support and resistance is at 1,730 and 1,760 respectively.

• Similarly, we see the broader market shares making little headway as there are still few catalysts for market players to follow. Therefore, the dour trend among the lower liners and broader market shares are likely to persist for now.

COMPANY BRIEF

• Berjaya Sports Toto Bhd’s 4QFY18 net profit declined 51.5% Y.o.Y to RM35.2 mln on the back of impairment in value for certain available-for-sale investments and goodwill relating to leasing of lottery equipment business in the Philippines. Revenue for the quarter slipped 5.2% Y.o.Y to RM1.40 bln.

• For FY18, cumulative net profit decreased 2.8% Y.o.Y to RM230.5 mln. Revenue for the year fell 1.2% Y.o.Y to RM5.66 bln. An interim dividend of 4.0 sen per share was declared. (The Sun Daily)

• Y&G Corp Bhd has withdrawn plans to buy two adjacent parcels of freehold land totalling 23.4 ha. in Pontian, Johor, for RM31.0 mln, following the expiry of the last extended conditional period on 26th May 2018 when conditions precedent in the deal had not been fully complied with. With the termination, the vendors are expected to refund the deposit of RM3.1 mln within 14 days. (The Edge Daily)

• XingHe Holdings Bhd has subscribed for 3.1 mln shares or a 52.0% stake in Sea Tuna Industry Sdn Bhd for RM3.1 mln. The main activity of Sea Tuna Industry is tuna and other seafood processing and trading. (The Edge Daily)

• Trading in the shares of Malaysia Pacific Corporation Bhd will be suspended on 25th June 2018 after the High Court allowed a winding-up petition against the company on 13th June 2018 that was filed by RHB Bank Bhd over unpaid debts amounting to RM118.2 mln. (The Edge Daily)

• Priceworth International Bhd has reported a 300% Y.o.Y jump in log production in May 2018 to a record high of 33,635.6 m3, thanks to contribution from its operations in the timber concession area FMU5 in Sabah.

• Meanwhile, Priceworth has extended its cash option to acquire another part of timber concession area FMU5 at a discounted RM235.0 mln until 31st July 2018. The cash option represents a discount of RM25.0 mln on the original RM260.0 mln purchase price for FMU5 to RM235.0 mln, which has been valued at RM433.8 mln. (The Edge Daily)

• Cahya Mata Sarawak Bhd (CMS) has obtained a one-year extension valued at about RM180.0 mln from the Sarawak government to upkeep State roads. The extension period will starting from 1st July 2018 to 30th June 2019, following the first extension given by the Sarawak government for six months that will expire on 30th June 2018. The original contract was for 15 years, which expired on 31st December 2017. (The Edge Daily)  

Source: Mplus Research - 19 Jun 2018