Sentiments Still Frail

• The FBM KLCI (-0.6%) slipped into the red on Monday, weighed down by the cancellation of the U.S.-China trade negotiation. Most of the lower liners – the FBM Fledgling (-0.3%) and FBM ACE (-1.1%) retreated, although FBM Small Cap (+0.2%) bucked current trend and closed in the green, while the Properties sector (+0.3%) was the sole advancer on the broader market.

• Market breadth was negative as decliners outpaced advancers on a ratio of 530-to- 304 stocks. Traded volumes also fell 20.5% to 1.64 bln share, amid renewed trade concerns.

• More than half of the key index constituents retreated, mainly Nestle (- 30.0 sen), Hong Leong Bank (-22.0 sen), Press Metal (-20.0 sen), Tenaga Nasional (-16.0 sen) and Genting (-12.0 sen). Amongst the biggest decliners on the broader market were Carlsberg (-40.0 sen), Malaysian Pacific Industry (-30.0 sen), United Plantations (-30.0 sen), Panasonic Manufacturing (-18.0 sen) and Padini (-17.0 sen).

• On the other side of the trade, notable advancers were Apex Healthcare (+31.0 sen), BAT (+24.0 sen), Y.S.P. Southeast Asia (+17.0 sen), Rapid Synergy (+16.0 sen) and Country Heights (+12.0 sen). Meanwhile, the five gainers on the FBM were Axiata (+9.0 sen), MISC (+8.0 sen), Petronas Gas (+8.0 sen), Telekom Malaysia (+5.0 sen) and Genting Malaysia (+2.0 sen).

• Majority of the Asian equities declined, as the latest round of U.S.-China tariffs goes into effect on Monday. The Shanghai Composite and the Nikkei were closed for public holidays, while the Hang Seng Index (-1.6%) slipped into the red alongside most of the ASEAN stockmarkets.

• Wall Street finished mostly lower, as sentiments were dampened by expectations of U.S. interest rates amid ongoing trade conflicts. The Dow and the S&P 500 thinned by 0.7% and 0.4% respectively, albeit losses were capped by gains in energy-related stocks. The Nasdaq, however, bucked the general bearish mood and closed with meagre gains.

• Likewise, major European indices – the FTSE (-0.4%), CAC (-0.3%) and DAX (- 0.6%), all closed in the red after lingering in the red amid unabated geopolitical uncertainties and trade war fears.

The Day Ahead

• Expectedly, the renewed concerns of the escalation of a trade war between the U.S and China resulted in Malaysian stocks turning lower yesterday. Although the FBM KLCI found support at the psychological 1,800 points level, the near term outlook remains frail and the downside risk is likely to persist over the near term.

• As it is, sentiments are becoming increasingly frail as a resolve to the trade spat is still no closer with both sides holding their positions. Hence, the issue will continue to weigh on sentiments for longer and this is likely to send more market players to the sidelines. Below 1,800, the supports are located at the 1,790 and 1,780, while the 1,803-1,810 levels are the immediate resistances.

• The lower liners and broader market shares bucked the tepid equity market environment yesterday, but we think sentiments will be similarly affected by escalating concerns over the trade war and we see the stocks making little headway until the calmer market conditions return.

COMPANY BRIEF

• CIMB Group Holdings Bhd has announced that its Chairman, Datuk Seri Nazir Tun Razak will step down from his post and all other positions within the group by 31st December 2018. Datuk Seri Nazir has served CIMB for 29 years and his current term was supposed to end in August 2019. (The Star Online)

• Sapura Energy Bhd has secured three new contracts and a contract extension valued at approximately RM815.0 mln in Australia, Brunei, Malaysia and Nigeria, bringing the group's total value in contract wins in the current financial year to-date to RM5.30 bln.

• It is the group’s first foray into Nigeria for its engineering and construction segment and the group aims to build a sustainable presence as well as create a strong service and product supply chain in the country by developing local talent for its future business in Africa. (Bernama)

• Yinson Holdings Bhd's 2QFY19 net profit fell 11.9% Y.o.Y to RM73.7 mln due to higher operational cost. Revenue for the quarter, however, added 13.5% Y.o.Y to RM246.5 mln.

• For 1HFY19, cumulative net profit declined 6.8% Y.o.Y to RM134.1 mln. Revenue for the period, however, rose 23.6% Y.o.Y to RM481.7 mln. (Bernama)

• Heng Huat Resources Group Bhd plans to dispose of its entire stake in HK Palm Fibre Manufacturer Sdn Bhd (HKPF) for RM2.7 mln. The sale to Arah Kawasan Sdn Bhd is expected to improve the group's performance as it will no longer need to absorb the losses of HKPF. The disposal will see a one-off loss on disposal of RM2.6 mln. (The Edge Daily)

• Bintai Kinden Corporation Bhd has bagged a RM14.0 mln contract from Tenaga Nasional Bhd to set up a 132 kV gas insulated switchgear switching station at Kuchai Lama, Kuala Lumpur. The contract is non-renewable and estimated to be completed within 710 days from the commencement date. (The Edge Daily)

• Mynews Holdings Bhd’s 3QFY18 net profit increased 17.7% Y.o.Y to RM7.3 mln, lifted by its continuous nationwide expansion. Revenue for the quarter grew 19.8% Y.o.Y to RM97.9 mln.

• For 9MFY18, cumulative net profit gained 9.1% Y.o.Y to RM20.4 mln. Revenue for the period improved 19.0% Y.o.Y to RM282.2 mln. (The Edge Daily)

• Berjaya Media Bhd’s 1QFY19 net loss widened to RM2.8 mln, from the RM1.5 mln net loss recorded in the previous corresponding quarter, mainly due to a decrease in its revenue that fell 27.2% Y.o.Y to RM7.4 mln. (The Edge Daily)

• Parkson Holdings Bhd’s sale of a 70.0% stake in Parkson Credit Sdn Bhd to its Hong Kong-listed subsidiary, Parkson Retail Group Ltd will result in a smaller share of future contribution from the credit service business. The divestment will dilute its effective shareholding in Parkson Credit to 68.5%, from 100%. (The Edge Daily)  

Source: Mplus Research - 25 Sept 2018