More Upsides Ahead

• The local key-index finished on an upbeat note following the positive sentiments spilled over from regional stockmarkets and renewed hopes for easing trade conflicts. Meanwhile, on a weekly basis, the FBM KLCI also closed 3.4% W.o.W higher after snapping a four-week decline. All the lower liners also ended on an upward trajectory, alongside most of the sub-sectors with the exception of the Mining sector.

• Market breadth remains positive as advancers beat decliners on a ratio of 605-to-315 stocks, while traded volumes spiked 21.6% to 3.27 bln shares – led by the positive trading momentum in global stockmarkets.

• Main Board outperformers include Petronas and Hong Leong-affiliated companies like Petronas Dagangan (+66.0 sen), Petronas Gas (+30.0 sen), Hong Leong Bank (+44.0 sen) and Hong Leong Financial Group (+36.0 sen). Dialog also finished strongly in the green on Friday with a 19.0 sen gain. Sin-stocks like BAT (+80.0 sen) and Heineken Malaysia (+34.0 sen) propped the broader market gains, followed by Hengyuan Refining (+37.0 sen), Petron Malaysia (+27.0 sen) and Cahya Mata Sarawak (+26.0 sen).

• Ajinomoto (-30.0 sen), Tasek (-30.0 sen), Carlsberg (-24.0 sen), Padini (-22.0 sen) and United Plantations (-22.0 sen) weighed on the broader markets, while the only two key-index decliners were KLCC (-5.0 sen) and Digi (-2.0 sen).

• The majority of Asian equities extended their gains as investors took a breather from its recent selldown amid the lack of trade conflict escalation and the positive sentiment ahead of the earnings season. The Nikkei ended strongly in the green, boosted by weaker Yen and strongerthan-expected earnings from Fast Retailing (+7.0%). The Hang Seng index also rallied, but the Shanghai Composite fell 0.2% on the back of quick profittaking activities. ASEAN indices, meanwhile, closed broadly higher on Friday.

• Positive corporate results and strong gains in technology stocks, meanwhile, pushed Wall Street higher as all the three key U.S. indices - the Dow (+0.4%), S&P 500 (+0.1%) and the Nasdaq (+0.03%) finished in the positive territory for the second-straight week.

• European stockmarkets also booked gains as investors continue to monitor the political developments in the U.K. and earnings of major U.S. banks. The FTSE gave up some of its gains, albeit still closing in the green, in-tandem with the weakness in Pound. Meanwhile, the DAX and CAC also expanded 0.4% at Friday’s close.

The Day Ahead

• Malaysian stocks continue to react positively to the calmer market conditions as the trade war concerns eased a notch, providing some measure of relieve to the markets that have endured significant volatility over the past six months.

• As the general market environment remains calm for now, there is further near term upside potential with the buying interest also showing signs of returning. In addition, the foreign selling is also showing signs of tapering, thus providing hope that the intense selldown might be over after foreign funds have sold more than RM10 bln worth of Malaysian stocks since GE14. For now, we see the key index attempting to fortify its position above the 1,700 points level with the 1,728 and 1,735 levels the next resistances. On the downside, the supports are at 1,710 and 1,700 respectively.

• We also see the lower liners and broader market shares seeing a revival amid the calmer market conditions that will provide some trading buy opportunities on some beaten down industry leaders.

COMPANY BRIEF

• Digi.com Bhd's 2Q2018 net profit rose 7.1% Y.o.Y to RM384.3 mln, on the back of business growth and improved operational efficiency. Revenue for the quarter gained 4.2.% Y.o.Y to RM1.62 bln.

• For 1H2018, cumulative net profit climbed 5.3% Y.o.Y to RM770.5 mln. Revenue for the period grew 4.0% Y.o.Y to RM3.52 bln. A second interim dividend of 4.9 sen per share, payable on 28th September 2018 was declared. (The Star Online)

• IHH Healthcare Bhd has entered into a share subscription agreement (SSA) with Fortis Healthcare Ltd for the subscription of 235.3 mln new Fortis shares or about 31.1% of the total voting equity share capital of Fortis for 4,000 crore rupees (RM2.35 bln) at a share price of 170 rupees (RM9.98) per share.

• The offer price per share for the Fortis open offer is made at a price of not less than 170 rupees or such higher price as required under the Securities and Exchange Board of India Regulations. (The Edge Daily)

• JAKS Resources Bhd is appealing the High Court's decision ordering the release of a RM50.0 mln bank guarantee to Star Media Group Bhd. The group also filed applications for a stay of execution on the High Court order and an injunction to restrain the two issuing financial institutions of the bank guarantee from releasing the proceeds to Star Media. (The Edge Daily)

• Bintai Kinden Corp Bhd has secured a RM50.5 mln contract from Tenaga Nasional Bhd to build a new GIS switching station in Selangor. Bintai Kinden has received the contract via its wholly-owned unit Kejuruteraan Bintai Kindenko Sdn Bhd, which has been appointed as contractor for the construction of the 132kV station. (The Edge Daily)  

Source: Mplus Research - 16 Jul 2018