Calmer Conditions

• The FBM KLCI (+1.3%) staged a sharp rebound last Friday as the key index recovered most of its previous session losses. Still, the FBM KLCI (-2.6% W.o.W) recorded its third weekly losing streak. The lower liners – FBM Small Cap (+0.7%), FBM Fledgling (+1.1%) and FBM ACE (+2.1%) all rebounded, while the broader market closed mostly higher.

• Market breadth turned positive as winners overcame losers on a ratio of 578-to-334 stocks, while 351 stocks closed unchanged. Traded volumes, however, fell 28.6% to 2.22 bln shares as selling activities cooled off.

• Chart toppers were Petronas Gas (+RM1.24), Tenaga (+32.0 sen), Maybank (+30.0 sen), CIMB (+29.0 sen) and Hong Leong Bank (+20.0 sen). Notable advancers on the broader market include Fraser & Neave (+40.0 sen), UMS Holdings (+37.0 sen), SAM Engineering & Equipment (+36.0 sen), United Plantations (+32.0 sen) and Hong Leong Industries (+22.0 sen).

• On the flipside, significant decliners on the broader were Time dotCom (-23.0 sen), Amway (-20.0 sen), Ajinomoto (- 14.0 sen), DKLS (-10.0 sen) and Vitrox (- 9.0 sen). Key losers on the FBM KLCI were Nestle (-90.0 sen), Axiata (-10.0 sen), MISC (-9.0 sen), Genting Malaysia (- 6.0 sen) and Hap Seng Consolidated (-5.0 sen).

• Asian benchmark indices managed to recover all their intraday losses to close higher as the Nikkei (+0.5%) marched into the positive territory in the eleventh trading hour. The Shanghai Composite added 0.9% to close marginally above the 2,600 psychological level, boosted by solid export data in September 2018 that grew 14.5% Y.o.Y, while the Hang Seng Index jumped 2.1% higher. ASEAN stockmarkets, meanwhile, closed on a positive note on last Friday.

• U.S. stockmarkets rebounded from a twoday slump as the Dow gained 1.2% after concerns over rising interest rates dwindled. On the broader market, the S&P 500 (+1.4%) snapped a six-day losing streak with ten of the eleven major sectors advancing, while the Nasdaq closed 2.3% higher

• Major European indices – the FTSE (- 0.2%), CAC (-0.2%) and DAX (-0.1%), however, all extended their losses after erasing all their intraday gains. The weakness stemmed from warnings from the International Monetary Fund (IMF) about risks to global economic growth that continues to sap investors’ confidence.

The Day Ahead

• After making a surprise upturn last Friday, it appears that the FBM KLCI is likely to extend its recovery for a second day in tandem with the positivity on Wall Street at the end of last week. However, we also think that volatility will remain a feature as bargain hunting activities will be punctuated by quick profit taking actions.

• Consequently, we think that the upsides could also be measured amid the push and pull factors, albeit we still expect some decent upsides after the steep falls last week. On the upside, we think the key index could move up to the 1,740-1,750 resistance levels, while the supports are at the 1,720 and 1,700 points respectively.

• We also think the broader market shares and the lower liners will continue making headway over the near term as their recovery continues. However, their recovery has been milder as many retail players are still wary over the market’s direction and this will continue to limit their gains, in our view.

COMPANY BRIEF

• OSK Holdings Bhd has terminated its plans to list its cables business on the Main Board of the Hong Kong Stock Exchange due to the present unfavourable global market conditions. To recap, the group has proposed the listing on 26th March this year to unlock shareholders' value in the cables business and provide transparent valuation benchmark for the same in Hong Kong. (The Edge Daily)

• FGV Holdings Bhd’s Chief Financial Officer, Ahmad Tifli Mohd Talha has resigned to pursue other career opportunities. His exit came shortly after former Group President and Chief Executive Officer Datuk Zakaria Arshad’s resignation in mid-September. (The Edge Daily)

• Hibiscus Petroleum Bhd has filed a lawsuit against Lime Petroleum Norway AS, which has reportedly caused the former financial losses. The legal action follows GHL's filing of the complaint at the Oslo Conciliation Board, which is the municipal's lowest level of the legal system for civil cases, back in April 2016. The claim was for an estimated value of at least US$35.0 mln (RM136.0 mln). (The Edge Daily)

• Alam Maritim Resources Bhd is proposing to issue three tranches of three-year Redeemable Convertible Notes to raise up to RM160.0 mln to replenish its fleet of vessel and working capital.  The group has inked a conditional subscription agreement with Advance Opportunities Fund I (AOF I), Advance Credit Fund SPC (ACF) and Advance Capital Partners Asset Management Pte Ltd (ACPAM) for the issues.

• The group plans to utilise up to RM50.0 mln of the proceeds for maintenance and inspection works on its 16 existing vessels, while up to RM80.0 mln will be used to acquire up to five Anchor Handling Tug Supply (AHTS) vessels and convert two AHTS vessels from using only fuel oil system to using both fuel oil and liquefied natural gas dual-fuel system.

• Separately, Alam Maritim has also proposed to undertake a bonus issue of up to 462.2 mln free warrants on the basis of one free warrant-for-every two existing shares. (The Edge Daily)

• Muda Holdings Bhd has proposed to acquire a stationery distribution company in Singapore for S$1.4 mln (RM4.3 mln) to strengthen its market position in Singapore. The group’s 70.0%-owned subsidiary, Intrapac (Singapore) Pte Ltd has acquired Wenfang Pte Ltd from Kang Yiang Li and Kuah Lian Lee.

• Wenfang is principally engaged in importing and distributing stationery and holds a number of agency products in Singapore under the name of Deli, Comix, Hopax, Kapamax and TiTi. (The Edge Daily)

• Vertice Bhd has signed a deal to supply construction materials and hotel furnishing products to smart hotels. The agreement inked with Smuzcity Bhd is expected to pave the way for the group to participate in the construction activities in the building of “smart hotel” chain based on the concept of “unmanned” and “cashless” using technologies such as virtual reality, artificial intelligence and mobile apps which will be applied into various hotel services applications. (The Edge Daily)

• MyEG Services Bhd has received a letter of intent (LoI) from Universiti Utara Malaysia (UUM) to co-operate and deploy their respective expertise, knowledge and resources to conduct academic programmes with the contract award to be formalised within 12 months.

• Both parties are keen to exploit their respective expertise, knowledge and resources to conduct academic programmes in IT and project management, blockchain technology, augmented and virtual reality, artificial intelligence, Internet of Things, software development and IT operations. (The Edge Daily)

• KKB Engineering Bhd is planning to bid for several projects in Sarawak’s ambitious billion-ringgit state water grid development programme after the Sarawak government has identified a total of 247 water and water-related projects for implementation in the next two years, with additional state allocation of RM800.0 mln, bringing to a total of RM2.8 bln, to fund these projects.

• The projects will include water treatment plants, distribution networks system, pipe replacement, upgrading works, nonrevenue water management, modernisation and Sarawak alternative rural water supply.

• Besides the construction job, KKB is also looking at supplying steel water pipes and structural steel for the projects. As Sarawak’s sole steel water pipe manufacturer, KKB expects to supply water pipes to other contractors involved in the projects, from 2H2019 to 2020. (The Star Online)  

Source: Mplus Research - 15 Oct 2018