Finding Selective Support

• The FBM KLCI clawed back earlier losses and closed higher on last-minute buyingsupport in O&G and telco heavyweights. The lower liners followed suit – led by the FBM ACE (+0.5%), while the broader market was also largely positive with the exception the Mining (-1.0%) sector.

• Market breadth was mildly positive as winners inched above the losers on a ratio of 424-to-414 stocks. Traded volumes, however, trimmed 37.4% to 2.04 bln shares amid the lack of fresh trading catalysts.

• Digi (+11.0 sen) buoyed the key-index gains after reporting stronger quarterly earnings, followed by other blue-chips like Petronas Chemicals (+25.0 sen), Petronas Gas (+16.0 sen), Hong Leong Financial Group (+10.0 sen) and Petronas Dagangan (+10.0 sen). Broader market chart-toppers, meanwhile, include Top Glove (+39.0 sen), Scientex (+33.0 sen), Ajinomoto (+24.0 sen), Carlsberg (+24.0 sen) and Warisan (+17.0 sen).

• On the other side of the trade, broader market underweights were Heineken Malaysia (-18.0 sen), Hong Leong Industries (-12.0 sen), BAT (-10.0 sen), Pintaras Jaya (-8.0 sen) and V.S. Industry (-8.0 sen). Notable Main Board decliners were CIMB Bank (-6.0 sen), Dialog (-5.0 sen), Hartalega (-4.0 sen), IOI Corporation (-4.0 sen) and Press Metal (-4.0 sen).

• Key regional benchmark indices closed mixed amid concerns of slowing global growth, dragged down by ongoing trade conflicts. The Shanghai Composite continued its downward bias on weakerthan-expected Chinese manufacturing data, while GDP growth slowed to 6.7% Y.o.Y in the 2Q2018, compared to 6.8% Y.o.Y in the 1Q2018. On the flipside, the Hang Seng index (+0.1%) eked-out gains, while the Nikkei rose 1.9% to 22,597.4 points. The majority of ASEAN equities, however, succumbed to selling-pressure on Monday.

• Major U.S. bourses closed in the red, weighed down by the pullback in tech and energy shares as crude oil prices weakens amid mounting supply. The Dow strengthened by 0.2% largely due to gains in banking heavyweights. However, techheavy indices like the S&P 500 and the Nasdaq were splashed in red.

• U.K. stockmarkets finished in the negative territory as commodities-related stocks tumbled in the wake of slowing economic growth in China. The FTSE (- 0.8%) snapped two-straight days’ of gains to close in the red, while the CAC ended 0.4% lower on Monday. The DAX, however, bucked the general downtrend as investors digested fresh rounds of earnings report from major banks.

The Day Ahead

• Once again, the key index stocks found late buying support to head higher in an otherwise insipid market environment that was dulled by the regional weakness. The market uncertainty also resulted in the buying interest tapering again as the market cautiousness returned.

• In all, there is still uncertainty in the near term market outlook amid the lack of leads and only the selective buying on index heavyweights is supporting the FBM KLCI. With uncertainties also a feature in regional stock indices, we think that the mixed environment will remain on Bursa Malaysia. Still, we think the local institutional support will shore up the key index as the calmer market conditions will provide some room for base building activities to help the FBM KLCI to remain comfortably above the 1,700 points level, which is also the key support for now. The main resistance is now pegged at the 1,750 level.

• We also think the mixed tone will remain among the broader market shares and lower liners as there are still few sustainable catalysts to provide a significant booster to the above listed shares.

COMPANY BRIEF

• DBE Gurney Resources Bhd has secured a RM36.0 mln contract from Ayamas Food Corp Sdn Bhd to supply poultry products to all KFC restaurants in Perak for a one-year period ending 30th June 2019. The agreement is expected to generate an annual turnover of about RM36.0 mln to the group. (The Edge Daily)

• Salcon Bhd has bagged a RM71.3 mln contract to build a storm water-pumping station in Sri Lanka over a 21-month period. Salcon s received the Letter of Acceptance from the Ministry of Megapolis and Western Development of Sri Lanka for the design and building of the Ambatale Storm Water Pumping Station. The project will commence upon the fulfilment of the conditions precedent. (The Edge Daily)

• TFP Solutions Bhd's major shareholder Datuk Hussian @ Rizal A. Rahman is now its Managing Director (MD). The former Non-Independent Director, who holds a 30.6% indirect stake via his company Rappotrans Sdn Bhd, has also relinquished his post in the audit committee due to his MD designation. (The Edge Daily)

• Pasdec Holdings Bhd’s Chief Executive Officer (CEO), Datuk Zuber Shamsuri will step down from his post following the expiry of his contract on 17th July 2018. (The Edge Daily)

• GHL Systems Bhd has been appointed as a direct merchant acquirer for UnionPay International in Malaysia. GHL has commenced merchant acquiring for UnionPay and is expected to reach 5,000 merchant outlets by August 2018. With this, GHL will be enabling merchants to accept both UnionPay card payments and QR Code payments. (The Edge Daily)

• After falling into the red for two consecutive financial years, Nova MSC Bhd expects to turn itself around in FY19, on the back of its backlog orders from the digital government services segment. Its current orderbook stands at RM117.0 mln, which will keep the group busy for the next three years.

• Focused on its two strategic pillars of e-solutions, namely digital government and smart healthcare, Nova MSC is eyeing to secure more contracts for its digital government services segment, particularly in Malaysia. (The Edge Daily)

• Xinghe Holdings Bhd has aborted its planned private placement of up to 10.0% of its issued share capital to raise up to RM18.3 mln. On 16th October 2017, Xinghe proposed to place out new shares to third-party investors to be identified to raise funds for working capital or funding future investments or business projects in Malaysia, as well as expenses relating to the proposed exercise. (The Edge Daily)  

Source: Mplus Research - 17 Jul 2018