Trade War Concerns Escalate

• The FBM KLCI finished the week on a stronger note, alongside its regional peers after lingering in the positive territory for the entire intra-day session. On a weekly basis, the local key-index also closed 0.4% W.o.W higher, helped by the recovery in emerging-market assets. All the lower liners advanced, together with the majority of the broader market, with the exception of the Construction, Plantations and Mining sub-sectors.

• Market breadth was positive as winners beat the losers on a ratio of 477-to-389 stocks, while traded volumes rose 6.6% to 2.07 bln shares amid recovery in investor sentiments across global stockmarkets.

• Top Main Board gainers were Genting Malaysia (+15.0 sen), Press Metal (+14.0 sen), Hong Leong Financial Group (+12.0 sen), Kuala Lumpur Kepong (+10.0 sen) and Nestle (+10.0 sen). Other broader market advancers, meanwhile were BAT (+66.0 sen), Hong Leong Industries (+44.0 sen), Malaysian Pacific Industries (+42.0 sen) and UMS Holdings (+21.0 sen). Pinehill Pacific (+30.0 sen), meanwhile, hits limit-up after it announced plans to dispose its oil palm estate for RM413.6 mln cash.

• On the contrary, United Plantations (-36.0 sen), Ajinomoto (-28.0 sen), Rapid Synergy (-22.0 sen), Cahya Mata Sarawak (-18.0 sen) and Khind Holdings (-16.0 sen) declined. Only three blue-chip underperformed its peers, mainly IOI Corporation (-11.0 sen), Tenaga Nasional (-8.0 sen) and KLCC (-7.0 sen).

• Major regional indices moved higher on Friday, boosted by the bullish sentiment spilled over from Wall Street after it hit record highs amid strong economic data. The Nikkei extended its sixth-straight sessions of gains, while the Hang Seng Index rose 1.6% amid a stronger Hong Dollar. The Shanghai Composite (+2.5%) also closed firmly higher, lifted by expectations of increased government stimulus to support China’s economy amid its ongoing trade spat with the U.S. The majority of the ASEAN stockmarkets also ended higher on Friday.

• U.S markets closed mostly lower on Friday, weighed down by consumer discretionary and technology stocks. The Dow (+0.3%) marked its second straight record high, but, the S&P 500 and the Nasdaq slipped into the red on the back of profit-taking activities.

• Key European benchmark indices finished on an upbeat tone, buoyed by the optimism in the global stockmarkets and strength in energy stocks. The FTSE gained 1.7% on gains in exporters, lifted by a softer Pound amid ongoing Brexit worries. The CAC and the DAX added 0.8% and 0.9% respectively.

The Day Ahead

• The buoyant global market condition over the past few sessions may give way to renewed concerns over an escalation of the trade spat between the U.S. and China after the latter broke off talks that also meant that the two nations will impose tariffs on more products beginning today.

• With the impasse rising to another level, we see sentiments turning wary again and this could prompt fresh profit taking activities on stocks that made headway last week. A pullback could see the key index retracing to the 1,803 points level, before the 1,800 points support comes into play. The main resistance for now is located at the 1,820 level.  After a steady recovery over the past week, we also see the lower liners and broader market shares taking a breather over the near term as we expect profit taking activities to take precedent over the near term with market sentiments are turning warier.

COMPANY BRIEF

• Country Heights Holdings Bhd plans to issue an asset-backed cryptocurrency, which will used mainly as an utility or reward token with the company’s services or product offerings. Country Heights has proposed to issue 1.00 bln units of the cryptocurrency, tentatively called “Horse Currency”, backed by RM2.00 bln worth of the company’s assets. An initial 300.0 mln of Horse Currencies will be in circulation to the public.

• The assets will be placed in a trust held by a reputable legal firm. The company is also looking at allowing the Horse Currency to be used as legal tender in purchasing and leasing the group’s unique properties scheme, especially the group’s resort properties. (The Star Online)

• Apex Equity Holdings Bhd has entered into a Heads of Agreement (HoA) for a proposed merger with Mercury Securities Sdn Bhd. The proposal will see Mercury transferring its stockbroking, corporate advisory and other related businesses together with the requisite business assets and business liabilities into Apex for a consideration of RM140.0 mln.

• The consideration shall be paid to Mercury Securities in three tranches, with the first tranche of RM22.0 mln to be paid in cash. The second tranche will involve an issuance of 100.0 mln new ordinary shares in Apex to Mercury at an issue price of 92.0 sen per share, representing a premium of about 1.0% over the fiveday volume weighted average market price of Apex shares up to and including 20th September 2018.

• Under the agreement, Mercury has the right to nominate not more than 33.0% of Apex’s board composition, one of whom shall also be the Managing Director/Chief Executive Officer. (The Star Online)

• Utusan Melayu (Malaysia) Bhd is offering a Voluntary Separation Scheme to more than half of its 1,500 workers as part of its restructuring exercise to reduce overall costs due to the company's financial constraints.
• To recap, Utusan Melayu was classified as a PN17 company on 21st August 2018, as it had failed to provide a solvency declaration to Bursa Malaysia after defaulting on its principal and profit payment to Maybank Islamic Bhd and Bank Muamalat Malaysia Bhd. On 30th August 2018, Utusan Melayu has announced the Corporate Debt Restructuring Committee will mediate between the group and its respective financiers. (The Edge Daily)
• Malaysia Airports Holdings Bhd (MAHB) is setting up a dedicated processing centre for the Customs Immigration and Quarantine (CIQ) clearance of departing airline crew at klia2. The airport operator will spend RM2.7 mln on the facility that is expected to be completed by mid-2019. (The Edge Daily)

• Binasat Communications Bhd's Chief Operating Officer, Zulamran Hamat, has been appointed its new Chief Executive Officer. Zulamran will also remain as an Executive Director. (The Edge Daily)

• KESM Industries Bhd’s 4QFY18 net profit fell 15.6% Y.o.Y to RM11.3 mln, mainly due to lower demand for burn-in, testing and electronic manufacturing services. Revenue for the quarter declined 5.0% Y.o.Y to RM85.3 mln.

• For FY18, cumulative net profit declined 10.6% Y.o.Y to RM39.3 mln. Revenue for the year, however, improved 3.5% Y.o.Y to RM349.8 mln. A final dividend of 6.0 sen per share was proposed. (The Edge Daily)

• NTPM Holdings Bhd's 1QFY19 net profit slumped 45.7% Y.o.Y to RM6.6 mln, dragged down by higher raw material costs. Revenue for the quarter dipped 2.1% Y.o.Y to RM172.4 mln. (The Edge Daily)

• MNRB Holdings Bhd has extended the repayment date of a RM320.0 mln credit facility obtained from AmBank (M) Bhd by six months to 22nd March 2019. MNRB has entered into a supplemental agreement with AmBank to defer the repayment date, but all other terms and conditions of the facility remain unchanged. (The Edge Daily)  

Source: Mplus Research - 24 Sept 2018