Poised For A Mild Rebound

• Although the FBM KLCI opened higher at the start of the trading bell, the key index was quick to swing into the negative territory, before closing 0.8% lower yesterday, in tandem with the weakness across its regional peers. Likewise, the lower liners – the FBM Small (-2.2%), FBM Fledgling (-1.7%) and FBM ACE (- 1.8%) all tumbled, while broader market were splashed in red.

• Market breadth was clearly negative as losers overthrown the winners on a ratio of 896-to-166 stocks. Traded volumes, however, added 28.6% to 2.23 bln shares as investors scramble to unwind their position.

• Two-thirds of the key index constituents were in the red, dragged down by Nestle and Press Metal that fell 30.0 sen each, followed by PPB Group (-24.0 sen), Genting (-23.0 sen) and Hartalega (-20.0 sen). Leading the decliners list on the broader market were consumer products stocks like Ajinomoto (-70.0 sen), Dutch Lady (-52.0 sen) and Heineken (-30.0 sen), while Aeon Credit and Top Glove slipped 50.0 sen and 32.0 sen respectively.

• On the flipside, among the biggest gainers on the broader market were BAT (+RM1.28), Panasonic (+30.0 sen), Carlsberg (+22.0 sen), UEM Edgenta (+10.0 sen) and Far East Holdings (+10.0 sen). Key winners on the local bourse include Petronas Gas (+24.0 sen), Malaysia Airport Holdings (+17.0 sen), Hong Leong Financial Group (+16.0 sen), Dialog (+9.0 sen) and Tenaga (+2.0 sen).

• Asian benchmark indices were pressured by the escalating tariff battle between U.S. and China. The Nikkei (-0.3%) gave up some of its previous session gains, while both the Shanghai Composite (- 0.3%) and Hang Seng Index (-0.3%) remain in the red. ASEAN stockmarkets, meanwhile, closed mostly negative yesterday.
   
• U.S. stockmarkets edged higher overnight as the Dow (+0.4%) extended its gains after the U.S. is reaching out to China on follow-up trade negotiations. On the broader market, the S&P 500 rose 0.04%, boosted by the telecommunication sector (+1.4%), but the Nasdaq (-0.3%) erased some of its previous session gains.
• Earlier, major European equities – the FTSE (+0.6%), CAC (+0.9%) and DAX (+0.5%) all advanced on optimism over a Brexit deal that could materialise soon. Oil & gas companies led the gains after crude oil prices staged a sharp rallied with the Brent oil hitting US$80 per barrel.

THE DAY AHEAD

• The Emerging Market malaise, coupled with the ongoing trade spat between the U.S. and China, battered Malaysian stocks yesterday to leave most equities in the red. However, with the world’s two largest economies meeting again to resolve their trade differences, this could provide some reprieve for now after a wretched session yesterday.

• Nevertheless, we think the rebound is likely to be measured for now as the general market outlook is still fragile amid the worries over the above issues that look to linger for longer. Buying interest is likely to stay tepid with the lack of positive leads and most market players will remain on the sidelines for the time being. On the upside, we think the key index could head to 1,790-1,795 zone, while there should be firm near term support at the 1,780 level.
   
• The calmer market conditions could also allow the lower liners and broader market shares to stage a rebound as many of the stocks are already oversold. Similar to the index-linked stocks, however, we think their recovery could be mild as most retail players are still wary of the current market environment and any gains are likely to be met by selling into strength strategies.

COMPANY BRIEF

• The Ministry of Finance (MoF) has removed Datuk Zakaria Arshad as the Government-appointed director to the Board of FGV Holdings Bhd, following a letter from the former instructing the group on the withdrawal of its nomination of Zakaria as director of FGV. (The Edge Daily)

• Sapura Energy Bhd is selling its 50.0% equity stake in its unit Sapura Upstream Sdn Bhd to OMV Akteingesellschaft, indicating that it is opting for a stake sale rather than an IPO avenue to pare down its debts. The group has inked a Heads of Agreement (HoA) with OMV for the transaction, which is based on an enterprise value of US$1.6 bln. (The Star Online)

• Unisem (M) Bhd has received a preconditional voluntary conditional takeover offer from joint-offerors, comprising Huatian Electronics Group (HK) Limited and Huatian Technology (Malaysia) Sdn Bhd and John Chia, Alexander Chia Jhet-Wern, Jayvest Holdings Sdn Bhd and SCQ Industries Sdn Bhd to acquire all the issued shares in Unisem, not already held by them. John Chia Sin Tet is the Executive Chairman and Managing Director (MD) of Unisem.

• The offer is at RM3.30 per share for 550.6 mln shares, totalling RM1.82 bln and will result in HT Malaysia being the single largest shareholder of Unisem upon the completion of the acquisition. The offerers intend to keep Unisem as a listed entity (The Star Online)

• Sunway Bhd and a Singapore company have won the tender to develop a 4.5-ac site for an executive condominium in the island republic after the won a tender of S$271.0 mln (RM817.2 mln) from the Housing and Development Board of Singapore.

• The 99-year lease term land located in Sembawang was awarded to Hoi Hup Realty Pte Ltd and its wholly-owned subsidiary - Sunway Developments Pte Ltd. The joint-venture (JV) company will be owned 65.0% by Hoi Hup and 35.0% by Sunway Developments. (The Star Online)

• MY EG Services Bhd has obtained a twoyear licence to carry out recruitment activities for job seekers within and outside Malaysia and foreign employees within Malaysia. The group has received the licence to conduct matters relating to private employment agencies from the Department of Labour Peninsular Malaysia, Ministry of Human Resources, which is valid from 1st September 2018 to 31st August 2020. The license is inline with the group’s job matching and placement service to match Malaysian employers with foreign workers launched recently. (The Edge Daily)

• Pasukhas Group Bhd has obtained a contract to sell a steam coal vessel in South Kalimantan, Indonesia for US$4.9 mln (RM20.4 mln) to a Singaporean company. (The Star Online)

• Vertice Bhd is partnering two local construction firms to pursue prequalification tender for two infrastructure projects in Sarawak, which include the balance of works to complete the coastal road network and the second trunk road in the State.
   
• The group has inked a Memorandum of Understanding (MoU) with Pembinaan RU Sdn Bhd and Image Façade Construction Sdn Bhd to jointly submit the prequalification tender for the projects. Under the JV, Pembinaan RU is tasked to secure the contract and to provide a management team to successfully deliver the project, while Vertice and Image Façade will provide the necessary expertise and equipment to deliver the project on time and satisfactorily. (The Edge Daily)
   
• Land & General Bhd aims to roll out three projects with an estimated GDV of RM4.2 bln next year in the Klang Valley. The projects are mainly Aria Rimba at U10, Shah Alam, a serviced apartment project at The Mines Resort in Seri Kembangan and a high-rise residential development in Bandar Sri Damansara. The first project slated to be launched will be the 120-acre Aria Rimba township developments with residential and commercial offerings from mid-2019. (The Edge Daily)
   
• Only World Group Holdings Bhd (OWG) has earmarked RM50.0 mln as capital expenditure for FY19, mainly to upgrade its existing indoor playgrounds or playlands and to build new ones. (The Edge Daily)

• MMAG Holdings Bhd has appointed Big Data analytics strategist and serial entrepreneur, Datuk Khan Mohd Akram Khan as its Chairman effective 12th September 2018, replacing Datuk Johari Yahya who has been re-designated as Independent Director. (The Edge Daily)

Source: Mplus Research - 13 Sept 2018