Few Signs Of A Rebound As Yet

• The FBM KLCI remained on a downward bias for the third-straight day ahead of Budget 2019 and the ongoing uncertainties in the global backdrop. All the lower liners – the FBM Small Cap (- 0.4%), FBM Fledgling (-0.1%) and the FBM Ace (-0.6%) were splashed in red, alongside most of the broader marker constituents.

• Market breadth remained unexciting as losers outweighed winners on a ratio of 497-to-315 stocks. Traded volumes also thinned by 18.9% to 1.95 bln shares as investors adopt a wait-and-see approach amid the lack of fresh trading impetus.

• Amongst the key-index decliners were banking heavyweights like Hong Leong Financial Group (-12.0 sen) and RHB Bank (-12.0 sen), followed by Nestle (- 30.0 sen), Axiata (-22.0 sen) and Maxis (- 17.0 sen). Other underperformers include BAT (-RM1.02) amid the unabated increase in illicit cigarette trade, together with Vitrox (-24.0 sen), Fraser & Neave (- 18.0 sen), Petron Malaysia (-16.0 sen) and Sungei Bagan Rubber (-16.0 sen).

• Broader market chart-toppers, meanwhile, were Dutch Lady (+58.0 sen), United Plantations (+26.0 sen), KESM Industries (+18.0 sen), UMW Holdings (+17.0 sen) and MY E.G., (+25.0 sen) which rebounded from last Friday’s panic-selling. Topping the Main Board was blue-chips like KLCC (+9.0 sen), Petronas Gas (+8.0 sen), Genting Malaysia (+7.0 sen), IHH Healthcare (+5.0 sen) and MISC (+3.0 sen).

• Most Asian stockmarkets rebounded on expectations more increased stimulus measures from the Chinese government. The Shanghai Composite climbed for the second consecutive session, together with the Hang Seng index (+2.3%), helped by the rally in Chinese brokers. The Nikkei also snapped its losing streak and closed 0.4% higher, on the back of gains in cosmetics giant Shiseido (+4.3%). ASEAN stockmarkets followed suit, closing mostly in the green on Monday’s close.

• The majority of U.S. bourses closed in the red, weighed down by rising U.S. interest rates, expectations of slower global growth and increasing geopolitical tensions. The Dow and the S&P 500 lost 0.5% and 0.4% respectively, despite the Nasdaq climbing higher, boosted by gains in tech-linked stocks.

• European equities ended mostly in the red ahead of the European Central Bank’s meeting on Thursday. The FTSE (-0.1%) gave up earlier gains and slipped into the negative territory in the eleventh hour amid elevated political risks. The CAC and the DAX, meanwhile, finished lower by 0.6% and 0.3% respectively.

The Day Ahead

• Although we anticipated a mild rebound yesterday, there was little reprieve from the selling pressure as it continues to send most stocks on Bursa Malaysia lower. As a consequent, the near term outlook is still frail that could leave Malaysian equities to endure further downside pressure.

• The weakness in overseas markets, which is partly affected by the rising geopolitical tensions and trade dispute between the world’s two largest economies, could also add to the dour note on Malaysian stocks for longer and with few positive impetuses, we see most market players staying on the sidelines for now. Hence, we think the key index could breach the 1,720 support and potentially head towards the 1,700-1,713 levels. The near term resistance is at the 1,730 level.

• The near term outlook for the lower liner and broader market shares is also frail for now as most retail players are still wary of the present market condition. Therefore, we see continuing near term downside for the lower liner indices over the near term.

COMPANY BRIEF

• Bumi Armada Bhd will receive part of the proceeds from the sale of crude oil amounting to US$8.5 mln (RM35.0 mln) from the sale of the crude oil stored on Armada Perdana FPSO. The US Bankruptcy Court in Texas allowed the appointment of a receiver/manager in Nigeria over Erin Petroleum Nigeria Ltd (EPNL) to oversee the sale and disposal of the crude oil stored on the Armada Perdana FPSO. The order was obtained on 18th October 2018 following the bankruptcy filing by EPNL (together with its parent company Erin Energy Corporation and certain other subsidiaries). (The Star Online)

• Axis Real Estate Investment Trust’s 3Q2018 net property income grew 30.6% Y.o.Y to RM45.3 mln, as its property size grew to 44 properties from 39 properties. Revenue for the quarter rose 24.6% Y.o.Y to RM52.4 mln.

• For 9M2018, cumulative net property income gained 16.4% Y.o.Y to RM123.5 mln. Revenue for the period added 14.7% Y.o.Y to RM144.9 mln. A third income distribution per unit of 2.4 sen for the quarter, payable on 10th December 2018 was declared. (The Edge Daily)

• Yinson Holdings Bhd has reported that the contract for the charter of its floating production storage and offloading vessel, Adoon, has been extended on an interim basis for three months until 16th January 2019. Its indirect wholly-owned subsidiary, Adoon Pte Ltd received the extended contract from Addax Petroleum Development (Nigeria) Ltd. (The Edge Daily)

• Dolphin International Bhd has won a RM7.2 mln contract to supply construction materials for the upgrading of a train cargo terminal in Padang Besar, Perlis. The job involves the supply of concrete, steel, skim coat, pipe culvert, floor tiles, building furnishing and other construction materials for upgrading the facilities of the terminal.

• The contract also includes the construction of a three-storey office building, improving the train tracks, the yard container, and the entrance and exit lane for container trucks. (The Edge Daily)

• My E.G. Services Bhd (MyEG) is teaming up with Universiti Malaya (UM) to promote and develop blockchain research as well as implement an e-wallet on its campus. On top of that, the group will work with UM to develop and implement educational material, promote awareness events, organise joint research projects and support talent development programmes in these fields.

• It will work with the university on the development and delivery of marketing and educational campaigns and materials on the benefits of blockchain and e-wallet technology. This is targeted at creating stakeholder awareness, consideration and demand. The MoU is valid for a fiveyear period and is subject to revision upon mutual agreement. (The Edge Daily)  

Source: Mplus Research - 23 Oct 2018