Dour Sentiments Still Dominate

• The FBM KLCI extended its losses for the ninth-straight session amid continuous foreign outflows and risk-off sentiments ahead of the OPEC meeting tomorrow and the heighted threat of a trade war between the U.S. and China. The lower liners – the FBM Small Cap (-1.5%), the FBM Fledgling (-0.9%) and the FBM Ace (- 2.1%) retreated, while the entire broader market were blanketed in red.

• Market breadth was bearish as decliners regained its power over advancers with 748 counters in the red. Traded volumes, meanwhile, was higher by 14.9% to 2.12 bln, in-tandem with the broad decline in the local stockmarket.

• Blue-chips like Petronas Dagangan (-74.0 sen), Hong Leong Bank (-56.0 sen), Telekom Malaysia (-49.0 sen), Hong Leong Financial Group (-42.0 sen) and Tenaga Nasional (-32.0 sen) were the big losers. Sin-stocks like BAT (-58.0 sen), Carlsberg (-46.0 sen) and Heineken Malaysia (-40.0 sen) also saw selling pressure on Thursday, alongside United Plantations (-RM1.10), Aeon Credit Service (-60.0 sen).

• On the other side of the trade, Fraser & Neave (+32.0 sen), Riverview Rubber (+17.0 sen), Genting Plantations (+16.0 sen), Scientex (+16.0 sen) and C.I. Holdings (+13.0 sen) advanced. Main Board winners, meanwhile, were Malaysia Airports (+19.0 sen), MISC (+19.0 sen), and Genting (+9.0 sen). Nestle (+80.0 sen), PPB Group (+28.0 sen), Kuala Lumpur Kepong (+24.0 sen), KLCC (+5.0 sen) and IOI Corporation (+4.0 sen) led the key-index gainers.

• Both the Shanghai Composite index and the Hang Seng dropped 1.4% each, as fears of an all-out U.S.-Sino trade war continus to weigh on sentiments. The Nikkei (+0.6%), however, closed higher – led by gains in leading Japanese chemical engineering firm Showa Denko (+5.0%). The majority of the ASEAN stockmarkets, meanwhile, tanked on Thursday’s closing bell.

• Wall Street finished on a downbeat tone, weighed down by giant e-commerce retailer Amazon after a U.S. court ruling paved the way for increased sales tax on online retailers. The Dow (-0.8%) extended its losing streak for the eight consecutive session, mainly due to losses in automakers amid concerns of higher Chinese tariffs. On the broader market, the S&P 500 (-0.6%) and the Nasdaq (- 0.9%) also closed in the red.

• London’s blue-chip gauge - the FTSE erased 0.9% in the earlier session, driven by weakness in energy stocks following expectations of increased production by major oil cartels and hawkish monetary policies moving forward. Both the DAX and the CAC were also lower by 1.4% and 1.1% respectively amid uncertainties in Italy’s political landscape.

The Day Ahead

• There was little reprieve for Malaysian stocks yesterday with yet another day of selling that sent the key index below the 1,700 points level as the heighten threat of a trade war continues to sap market interest.

• There appears to be little reprieve for Malaysian stocks for the day ahead as the threat of the trade war continues to ring a cautious tone that is prompting further selling of many Asian stocks as well.

• Therefore, we see little change in the immediate market outlook as the above issue inches towards fruition with the U.S imposing tariffs on China made goods early next month that is bound to prompt a similar respond from the latter. Therefore, the market’s wariness is expected to prolong and damping hopes for the FBM KLCI to stage a rebound to above the 1,700 points level. Instead, we think the key index could retrace back to the 1,680 support level and if it gives way the next support is at 1,660 level. Apart from 1,700, the other resistance is at 1,710 level.

• Similarly, we see the broader market environment remaining downtrodden with the retail players continuing to stay on the sidelines amid the uncertain market environment and the downside pressure will remain for now.

COMPANY BRIEF

• Aeon Credit Service (M) Bhd has doubled its capital expenditure (capex) allocation to RM120.0 mln for FY19, against RM60.0 mln in FY18. The increased allocation would be utilised for branch transformation, digital marketing and strengthening of digital initiatives under its e-money platform. Two new products would be launched in FY19, namely Aeon Wallet and Aeon Member Plus Card to provide customers with payment, privileges and benefits. (Bernama)

• JAG Bhd has proposed a private placement to raise up to RM14.4 mln to fund its property development project in Klang. The proposed placement entails an issuance of up to 192.2 mln new shares, representing up to about 10.0% of its enlarged issued and paid-up share capital, at an indicative price of 7.5 sen per share. (The Edge Daily)

• Berjaya Food Bhd’s 4QFY18 net profit stood at RM0.8 mln vs. a net loss of RM3.4 mln in the previous corresponding quarter, as revenue improved with more Starbucks cafes in operation. Revenue for the quarter grew 5.7% Y.o.Y to RM160.0 mln from RM151.4 mln.

• For FY18, cumulative net profit sank 90.0% Y.o.Y to RM1.1 mln. Revenue for the year, however, improved 5.6% Y.o.Y to RM639.6 mln. A fourth interim dividend of one sen per share, to be paid on 28th July 2018, was declared. (The Edge Daily)

• Sapura Energy Bhd has bagged nine new contracts worth approximately RM1.80 bln, bringing its accumulative contract wins year-to-date to RM4.50 bln. The combined value of the contracts represents a three-fold jump or an increase of nearly 250% compared to the value achieved in the corresponding period of the previous year, between February 2017 to June 2017. (The Edge Daily)

• XOX Bhd has entered into a joint venture agreement (JVA) with Yayasan Nahdlatul Ulama, EH Integrated Systems Sdn Bhd and PT Nusantara Digital Telekomunikasi to provide telecommunication services in Indonesia. The new joint venture company — PT Nusantara Mobile Telecommunication will engage in business activities related to telecommunications and telecommunication products and services, the provision of mobile application services (Voopee), and ewallet services in Indonesia.

• XOX Media will take up a 40.0% stake in PT Nusantara Mobile Telecommunication, Yayasan 20.0%, EH Integrated 15.0% and PT Nusantara Digital the remaining 25.0%. (The Edge Daily)

• Multi-Usage Holdings Bhd’s external auditor, Messrs Baker Tilly Monteiro Heng (Baker Tilly) has announced its resignation as the company auditor due to disagreement in fixing audit fee. (The Edge Daily)  

Source: Mplus Research - 22 Jun 2018