Dour Trend

• The FBM KLCI trended lower for the third straight session last Friday as the key index closed at its lowest level since July 2018, pressured by the renewed volatility on Wall Street. Consequently the FBM KLCI fell 0.9% W.o.W. Similarly, the lower liner – the FBM Small Cap (-0.6%), FBM Fledgling (-1.2%) and FBM ACE (-1.2%), all retreated, while the broader market was painted in red, dragged down by the Energy sector (-2.1%).

• Market breadth stayed negative as losers overpowered winners on a ratio of 639- to-265 stocks, while 349 stocks were unchanged. Traded volumes was flat with 2.06 bln shares exchanging hands.

• More than two-thirds of the key index constituents were in the red, dragged down by Nestle (-50.0 sen), followed by Petronas Dagangan (-36.0 sen), Axiata (- 20.0 sen), Petronas Gas (-20.0 sen) and Hong Leong Financial Group (-16.0 sen). Notable decliners on the broader market were Top Glove (-26.0 sen), Hengyuan Refining (-17.0 sen), Apex Equity (-15.0 sen), Supermax (-12.0 sen) and Petron Malaysia (-10.0 sen).

• On the flipside, Aeon Credit (+36.0 sen) topped the broader market advances list after delivering a strong set of quarterly earnings, while Tasek Corporation (+32.0 sen), Allianz (+22.0 sen), Ajinomoto (+18.0 sen) and Oriental Interest (+18.0 sen) advanced. Meanwhile, KLCC (+5.0 sen) was the sole winner on the FBM KLCI index.

• Asian benchmark indices ended lower as the Nikkei fell 0.8% to close at its twoweek low after the surge in U.S. bond yields drove investors away from risky assets. The Hang Seng Index declined 0.2%, while the Shanghai Composite will only resume trading on today after a week-long public holiday. ASEAN stockmarkets, meanwhile, were also splashed in red.

• U.S. stockmarkets extended their losses last Friday as the Dow fell 0.7% after the U.S. economy only added 134,000 jobs in September 2018, well below consensus of 185,000 jobs. On the broader market, the S&P 500 slipped 0.6% with only the utilities sector (+1.3%) in the positive, while the Nasdaq finished 1.2% lower to close below the 7,800 psychological level.

• Earlier, European indices – the FTSE (- 1.4%), CAC (-1.0%) and DAX (-1.1%), all closed in the red, as investors digested the latest jobs data in U.S. The heightened fears over global trade was also sent mining stocks like Antofagasta (-5.4%), Anglo American (-4.7%) Rio Tinto (-4.0%) lower.

The Day Ahead

• Sentiments are taking a hit with the market succumbing to renewed selling and profit taking activities amid the heightened risk of an escalating trade war between the U.S. and China, forcing the latter to ease up further on its bank lending and even tax cuts. The moves highlight the increasingly dire consequences that may hit the world’s second largest economy.

• With equity market sentiments remaining insipid, we see further near term selling as market players close out their shortterm positions. Therefore, we see the market weakness prevailing for longer amid the cautious market undertone. As the 1,780 level has also given way, the supports are now at the 1,770 and 1,760 levels. Apart from the 1,780 resistance, the other resistance is at 1,790.

• Similarly, the lower liners and broader market shares are also looking increasingly dour in tandem with the softness in index linked stocks. Therefore, we also expect stocks on the FBM Small Cap, Fledgling and ACE Market indices to continue their downtrend over the near term.

COMPANY BRIEF

• ACE-Market-listed Inta Bina Group Bhd and Oceancash Pacific Bhd have obtained the approval from the Securities Commission to transfer their listings to the Main Market of Bursa Malaysia.

• Construction player Inta Bina was listed on 25th May 2017, while Oceancash - a manufacturing of non-woven fabric for consumer sector, auto and airconditioning was listed in 2004. (The Edge Daily)

• Malaysia Marine Heavy Engineering Holdings Bhd (MHB) has filed a payment claim of US$30.2 mln (RM125.4 mln) against EA Technique (M) Bhd just days after it received arbitration for US$21.7 from the latter. To recap, both parties were in conflict over a contract to convert a vessel into a floating storage and offloading (FSO) facility, which the two companies had inked in 2015. An attempt to reach a settlement failed on 22th June this year. (The Star Online)

• My EG Services Bhd has added a blockchain-based payroll management software dubbed “PayMe” to its line of services. The software, which is targeted at corporate clients, will allow employers to record and manage overtime with better accuracy and efficiency. (The Edge Daily)

• S P Setia Bhd and Sime Darby Property Bhd, which each own 40.0% of Battersea Project Holding Co Ltd (BPH), has confirmed that the deadline to finalise a proposed £1.61 bln (RM8.8 bln) sale in a unit of BPH has been delayed to 31st December 2018 from 30th September 2018 previously.

• To recap, Permodalan Nasional Bhd and the Employees’ Provident Fund (EPF) had in January proposed to acquire commercial assets worth £1.61 bln in BPH’s unit Battersea Phase 2 Holding Co. BPH is also 20.0%-owned by EPF. (The Edge Daily)

• Tien Wah Press Holdings Bhd’s 51.0%- owned indirect Australian unit, Anzpac Services (Australia) Pty Ltd is planning to sell a parcel of land with a building in New South Wales for A$22.0 mln (RM65.2 mln) to CEA Property Pty Ltd. This disposal follows the cessation of Anzpac’s printing business, which was first announced in June, in-line with the group’s plans to reduce operating costs. (The Edge Daily)

• Willowglen MSC Bhd has clinched a contract from Syarikat Pembenaan Yeoh Tiong Lay Sdn Bhd worth RM139.4 mln to construct and maintain communication systems for the Gemas-Johor Bahru electrified double-track project. The project works will be completed by April 2021.

• Meanwhile, the RM8.9 bln rail project, which is currently developed by a Chinese consortium, is scheduled for completion on October 2021. (The Star Online)

• Zelan Bhd has been slapped with a US$1.2 mln (RM4.8 mln) claim by Chinese power equipment maker Dongfang Electric Corp in relation with a coal-fired steam power plant project in Central Java, Indonesia, following some disputes and differences arising from a 2014 agreement. (The Edge Daily)  

Source: Mplus Research - 8 Oct 2018