FBM KLCI – Daily

• The FBM KLCI extended its losses amid renewed concerns over rising U.S. interest rates. The lower liners – the FBM Ace and the FBM Fledgling flatlined, while the FBM Small Cap closed lower by 0.7%. Meanwhile, the same negative sentiments also clouded the broader market as twelve-of-the thirteen sub sectors ended in the red.

• Market breadth was tepid as decliners outshined the winners on a ratio of 528- to-317 stocks, while traded volumes eased 11.9% to 2.06 bln shares on the back of extended selling by institutional funds.

• Key laggards on Malaysia’s Main Board include Malaysia Airports (-18.0 sen), Axiata (-12.0 sen), Hartalega (-12.0 sen), MISC (-11.0 sen) and KLCC (-10.0 sen). Other decliners were UWM Holdings (- 28.0 sen), KESM Industries (-26.0 sen), Riverview Rubber (-25.0 sen), Lotte Chemical Titan (-23.0 sen) and Hengyuan Refining (-17.0 sen).
• On the contrary, gainers were BAT (+RM1.00), Dutch Lady (+58.0 sen), MSM Malaysia (+39.0 sen), Ajinomoto (+24.0 sen) and Alcom Group (+24.0 sen). The key-index’s leading gainers were Hong Leong-linked counters like Hong Leong Financial Group (+12.0 sen) and Hong Leong Bank (+2.0 sen), followed by Sime Darby (+2.0 sen). Press Metal (+20.0 sen) also advanced on stronger aluminium prices, following the closure of the world largest alumina refinery in Brazil.
• Asian equities were splashed in red, weighed down by rising U.S. bond yields and expectations of higher interest rates. The Nikkei was down 0.6%, mainly due to losses in defensive-linked sectors, while the Hang Seng (-1.7%) was downward pressured. The majority of the ASEAN indices followed suit and ended lower at Thursday’s close. China stockmarkets remain closed.
• The U.S. indices - the Dow (-0.8%), the S&P 500 (-0.8%) and the Nasdaq (-1.8%) all retreated, hit by the unexpected surge in Treasury yields that reached multi year highs as well as stronger-than-expected employment data that could fuel inflation.
• Major benchmark European indices also ended in the negative territory amid unabated geopolitical uncertainties. The FTSE (-1.2%) tumbled, albeit losses were capped by gains in major banks. The DAX also narrowed by 0.4%, while the CAC finished 1.5% lower at 5,410.9 points.

The Day Ahead

• Although the key index found support at the 1,790 level yesterday, it may not hold for much longer as the global market sentiments have taken a beating amid the bond selloff that is likely to send equities into a tailspin over the near term. With the above level unlikely to hold, the support has now moved lower to the 1,780 level. The 1,800 points level remains the main resistance level.

• As it is, market players are increasingly spooked by the higher bond yields that could be a harbinger for higher interest rates in the near future, particularly as the U.S. inflation looks to perk up. Coupled with the unabated concerns over the trade feud between the U.S. and China, the near term market outlook is still fragile.

• While the lower liners and broader market shares have held up well over the past week, the weaker market environment could prompt more profit taking moves ahead of the weekend and we see the FBM Small Cap, Fledgling and ACE Market stocks likely to end the week on a downbeat note.

COMPANY BRIEF

• Malayan Banking Bhd (Maybank) has secured the approval from the Monetary Authority of Singapore (MAS) to locally incorporate its Community Financial Services (CFS) business in Singapore. The full banking licence with Qualifying Full Bank privileges was obtained by its wholly-owned subsidiary, Maybank Singapore Ltd (MSL). (The Star Online)
• Aeon Credit Service (M) Bhd's 2QFY19 net profit gained 13.0% Y.o.Y to RM80.6 mln, from RM71.4 mln last year, as its total transactions and financing volume grew. Quarterly revenue also grew 7.0% Y.o.Y to RM332.1 mln against RM311.3 mln in the previous corresponding period. The company has declared an interim single-tier dividend of 22.3 sen per share, payable on 8th November 2018.

• For 1HFY19, net profit surged 22.0% Y.o.Y to RM179.9 mln, from RM147.2 mln a year ago, while revenue grew 7.0% Y.o.Y to RM657.8 mln, from RM613.6 mln last year. (The Star Online)

• Nestle (Malaysia) Bhd has announced the resignation of Alois Hofbauer as its Chief Executive Officer (CEO) as he pursue other interests outside the company. He will be replaced by Juan Aranols, from 1st December this year. Aranols is currently the Chief Financial Officer (CFO) for the Nestle Group’s Asia, Oceania and SubSaharan Africa zone (Zone AOA). (The Edge Daily)

• Eonmetall Group Bhd has obtained the exclusive rights from a unit of FGV Holdings Bhd to build, own and operatepalm fibre oil extraction plants at six selected mill locations for a concession period of 10 years, before transferring their ownership to the FGV unit. (The Edge Daily)

• Minority shareholders of poultry-firm, DBE Gurney Resources Bhd have been advised to accept its largest shareholder Doh Properties Holdings Sdn Bhd's takeover offer for the remaining shares in the former for 3.5 sen per offer share and one sen per offer warrant.

• Mercury Securities Sdn Bhd, the independent advisors, have also concurred that Doh Properties’ offer to acquire DBE is “fair” and “reasonable”. Doh Properties held a 34.9% equity stake in DBE as at 28th September 2018. (The Edge Daily)  

Source: Mplus Research - 26 Sep 2018