Few Signs of Reprieve As Yet

• The FBM KLCI (-0.1%) recorded its fourth consecutive session of losses after hovering mostly in the negative territory yesterday. The lower liners – the FBM Small Cap (-1.7%), FBM Fledgling (-1.1%) and FBM ACE (-1.2%), all extended their losses, while the Plantation sector (+0.2%) was the sole advancer on the broader market.

• Market breadth remained negative as losers thumped winners on a ratio of 745- to-195 stocks, while 323 stocks were unchanged. Traded volumes, however, rose 15.2% to 2.37 bln shares as selling activities among the lower liners escalated.

• Leading the decliners list on the local bourse were Press Metal (-15.0 sen), followed by Hartalega (-7.0 sen), Telekom (-7.0 sen), Tenaga (-6.0 sen) and RHB Bank (-5.0 sen). Gamuda and MMC Corporation sank 78.0 sen and 22.0 sen respectively after the termination of MRT2 underground contract, while other decliners on the broader market were consumer products giants like Fraser & Neave (-68.0 sen), Dutch Lady (-66.0 sen) and Ajinomoto (-42.0 sen).

• Meanwhile, Allianz (+50.0 sen), Rapid Synergy (+20.0 sen), Imaspro (+19.0 sen), Hong Leong Industries (+12.0 sen) and BAT (+10.0 sen) topped the broader market advancers list. Key winners on the FBM KLCI were Nestle (+50.0 sen), IHH (+20.0 sen), IOI Corporation (+8.0 sen), Petronas Dagangan (+6.0 sen) and DiGi (+3.0 sen).

• Asian benchmark indices started off the week negatively as the Hang Seng Index slipped 1.4%, dragged down by the ongoing trade tension, coupled with rising bond yields. Despite the People Bank of China cutting bank’s reserve requirement ratio by 1%, the Shanghai Composite sank 3.7% to close below the 2,800 psychological level. Japanese stockmarkets were closed for the HealthSports Day public holiday, while ASEAN stockmarkets remain painted in red.

• U.S. stockmarkets ended on a mixed note overnight on lingering concern over rising interest rates. The Dow rose 0.2% after recovering all its intraday losses. On the broader market, the S&P 500 (-0.04%) recorded its third straight session of decline, while the Nasdaq finished 0.7% lower.

• Major European indices – the FTSE (- 1.2%), CAC (-1.1%) and DAX (-1.4%), all extended their losses, pressured by unabated concerns over Italy’s government spending plans. Notable decliners include Italian bank like Unicredit SpA (-3.6%) and Banco Bpm SpA (-6.5%).

The Day Ahead

• Despite the overwhelming dour atmosphere on Bursa Malaysia, the FBM KLCI managed to claw back most of its intraday losses as local institutions provided the support to limit the losses. The action, however, does not mask the fact that the general equity market undertone is still weak as the trade dispute between the U.S. and China is already forcing the latter to launch preemptive measures to curtail the ill effects that may dampen the Chinese economy.

• With few positives to lift the insipid undertone, we see the weakness prevailing on Bursa Malaysia stocks and the downtrend is set to continue for longer. However, we also do not discount the possibility of local institutions again providing the support to cushion the expected downtrend as foreign funds are seen to be still in the selling mode amid the renewed near term uncertainties. Therefore, we also continue to see 1,770 and 1,760 levels serving as the near term supports, while the resistances are at 1,780 and 1,790 respectively.

• We also see little reprieve for the lower liners and broader market shares amid the still challenging market environment that is likely to extend the ongoing selldown. As it is, retail players are staying away from equities until the selling subsides and until there is a clearer market direction.

COMPANY BRIEF

• T7 Global Bhd, which is principally involved in engineering and oil & gas, has decided to venture into retail clothing. The group has established a new whollyowned subsidiary, T7 Solutions Sdn Bhd to engage in the retail sale of articles of clothing, articles of fur, clothing accessories, footwear and other retail sale of new goods in specialised stores. (The Edge Daily)

• Reach Energy Bhd has drilled its first exploration well on its Emir-Oil asset in the Kariman field, Kazakhstan on 6th October 2018. The exploration well is expected to confirm the extent of the hydrocarbon resource being exploited in the Kariman structure and would potentially increase the group’s 2P (proved and probable) reserves significantly. (The Edge Daily)

• MMC Corp Bhd has announced that MMC Gamuda KVMRT (T) Sdn Bhd has not received any notice from Mass Rapid Transit Corp Sdn Bhd (MRT Corp) or the Government pertaining to the termination of the Mass Rapid Transit Line 2 (MRT2) underground contract. To recap, the joint venture company (JVco) is held equally by MMC and Gamuda Bhd.

• Tengku Datuk Aishah Sultan Ahmad Shah has been appointed as the Non-Executive Chairman of Diversified Gateway Solutions Bhd, effective 8th October 2018. Tengku Aishah is also the Independent Non-Executive Chairperson of Insas Bhd, Inari Amerton Bhd and Mieco Chipboard Bhd. In addition, she is also an Independent Non-Executive Director of WZ Satu Bhd. (The Edge Daily)

• MCE Holdings Bhd is collaborating with Chinese electronic parts manufacturer, Suzhou Prachtig Electronic Material Co Ltd to set up a framework for the consultation and exchange of information and technology.

• Initially, the partnership will focus on the localisation of automotive plastic parts and value-added processes to develop and supply the products in Malaysia and the rest of ASEAN. Both parties intend to incorporate a joint-venture company for the purposes of carrying on the business of designing, developing, manufacturing and supplying of the products. (The Edge Daily)

• IHH Healthcare Bhd has upped its stake in Acibadem Saglik Yatirimlari Holding AS to 90% (from 60%), after the latter’s shareholders converted their shares into equities in the Malaysia-based healthcare group.

• Acibadem’s founder, Mehmet Ali Aydinlar and his wife, Hatice Seher Aydinla converted an approximate 15.0% stake in the Turkish healthcare group into 262.2 mln IHH shares. Subsequently, Khazanah Nasional Bhd’s wholly-owned unit, Bagan Lalang Ventures Sdn Bhd, has also converted their 15.0% equity stake in Acibadem for 262.2 mln IHH shares. (The Star Online)  

Source: Mplus Research - 9 Oct 2018