• The FBM KLCI shrugged off the recovery on Wall Street overnight and lingered in the red on Friday, owing to extended losses in selected heavyweights. The majority of the lower liners – the FBM Small Cap (-0.4%) and the FBM Ace (- 0.8%) also fell, although the FBM Fledgling regained its footing and closed higher. The broader market, meanwhile, were mostly positive, with the exception of the Technology, Financial Services, Energy and Transportation and Logistics.

• Market breadth was still bearish as losers beat the winners on a ratio of 460-to-373 stocks, while traded volumes declined 18.7% to 1.82 bln shares amid the lack of fresh trading catalysts.

• Significant Main Board decliners include Public Bank (-28.0 sen), Nestle (-20.0 sen), MISC (-14.0 sen), Petronas Gas (- 10.0 sen), Digi (-7.0 sen). Meanwhile, on the broader market, main losers were KESM Industries (-38.0 sen), Ajinomoto (- 30.0 sen), Malaysian Pacific Industries (- 30.0 sen), Lingkaran Trans Kota (-17.0 sen) and Fraser & Neave (-16.0 sen).

• On the other hand, Selangor Properties (+RM1.21) closed higher following a privatisation deal by its owners, alongside BAT (+64.0 sen), Batu Kawan (+36.0 sen), Carlsberg (+26.0 sen) and QL Resources (+23.0 sen). Hong Leong Financial Group (+26.0 sen), Malaysia Airports (+8.0 sen), Dialog (+6.0 sen), Petronas Chemicals (+4.0 sen) and Tenaga Nasional (+4.0 sen), meanwhile, outperformed its peers on the FBM KLCI at Friday’s close.

• The key regional benchmark indices remained in the red on Friday, following the knee-jerk self-off previously. The Nikkei closed 0.4% lower ahead of the Bank of Japan’s meeting next week, while the extended weakness in China’s Yuan kept the Shanghai Composite (-0.2%) in the red. The Hang Seng was also weaker by 1.1%, alongside the majority of the ASEAN stockmarkets.

• Key U.S. benchmark stockmarkets finished mostly lower, despite higherthan-expected GDP data, dragged down by concerns over the slower growth outlook and soft corporate results from selected tech heavyweights like Amazon and Alphabet. The Dow narrowed 1.2%, while the S&P 500 and the Nasdaq were hit by 1.7% and 2.1% losses respectively.

• Main European bourses were southbound, taking cues from the negative sentiment spilled over from Wall Street and lingering worries of the ongoing trade war. Weakness in commodity-linked counters dampened the FTSE, which closed 0.9% lower. The DAX and the CAC, meanwhile, also tapered by 0.9% and 1.3% respectively.

The Day Ahead

• The FBM KLCI’s recovery was short-lived last Friday as the selling remained unabated to leave little room for a sustained upside. At the same time, market depth is also lacking as most players are shying away in view of the negative market condition.

• The start of week is unlikely to bring much cheer to market players as the odds of further near term downside is still high after the sustained weakness in most global stock indices. The spate of lower-than-expected earnings on some U.S. bellwethers is also leaving investors wary, while on the background, the trade war and prognosis of slower economic growth is also sapping confidence. Therefore, we see downside pressureremaining for now and this leaves the 1,680 support level vulnerable again, which is followed by 1,670 level. On the upside, the 1,700 points level is still the main hurdle for now.

• There is also no reprieve for the rest of the stocks on Bursa Malaysia and we see FBM Small Cap, Fledgling and ACE Market stocks continuing to trend lower amid the reduced following that is also likely to exacerbate the selling.

COMPANY BRIEF

• Sunway Bhd has entered into a joint venture agreement with MKH Bhd to develop a transit-oriented mixed project worth RM540.0 mln in Kajang, Selangor. The project, to be located on a 5.3 ac. site, is expected to be launched in 4Q2019 and be completed within four years.

• Sunway will hold a 60.0% equity stake in the joint venture firm, while MKH will hold the remaining 40.0% stake. Located less than 1km from Kajang town, the development will comprise commercial lots and residential units, comrpising of affordable units.(The Star Online)

• Dagang NeXchange Bhd (DNeX) has accepted a RM59.4 mln contract for the maintenance of the Accountant General’s Department’s accounting system, iGFMAS. The one-year contract will expire on 9th August 2019. (The Star Online)

• Computer Forms (M) Bhd has received a conditional mandatory takeover offer from substantial shareholder, Tan Sri Robert Tan Hua Choon. The RM1.25 per stock cash offer was triggered after Tan acquired an additional 1.9 mln shares in Computer Forms on 26th October 2018 via a direct business transaction. The purchase of the 4.7% block of shares increased his stake in the company to 33.6%. The offeror intends to maintain the listing status of Computer Forms on Bursa Malaysia. Tan Sri Tan first surfaced in Computer Forms in October 2016. (The Star Online)

• The Ministry of Finance has announced that MMC-Gamuda KVMRT (T) Sdn Bhd, a joint-venture between MMC Corp Bhd and Gamuda Bhd, will remain the contractor for the underground works portion of the MRT Sungai Buloh-Serdang-Putrajaya line (MRT2) at an even lower cost of RM13.11 bln. This is after the consortium agreed to a larger cost cut of 21.5% or RM3.6 bln, which is RM1.47 bln more than the reduction of RM2.13 bln previously offered, following renegotiations between the parties on 22nd October 2018. (The Edge Daily)

• AirAsia Group Bhd's consolidated aircraft operating certificates (AOCs) comprising Malaysia, Indonesia and the Philippines saw total passengers increase by 9.0% Y.o.Y 3Q2018 to 10.8 mln, on higher capacity. Capacity or number of seats flown recorded by the consolidated AOCs rose 16.1% Y.o.Y to 13.2 mln seats. The total fleet size of AirAsia Group’s consolidated AOCs grew to 127 aircraft. (The Edge Daily)

• EITA Resources Bhd's has secured a contract from Tenaga Nasional Bhd (TNB) for a main substation extension worth RM18.3 mln in Ayer Tawar, Perak. The time for completion of the contract will be 912 days from the commencement date on 23rd October 2018. (The Edge Daily)

• Tropicana Corporation Bhd is disposing of its 55.0% stake in Tropicana Ivory Sdn Bhd (TISB) for RM70.7 mln to Hemat Tuah Sdn Bhd. Upon the completion of the disposal, TDP will no longer hold any equity interest in TISB, a joint venturebetween Tropicana Corp and Ivory Properties Group Bhd. (The Edge Daily)

• Ipmuda Bhd has come to an agreement with Maju Holdings Sdn Bhd for the latter to settle its RM7.2 mln debt to the former by transferring 10 units of properties in the project known as Maju Kuala Lumpur. The 10 properties, worth an aggregate purchase price of RM6.7 mln, will settle part of the debt, with the balance RM0.5 mln coming from the transfer of additional units of properties from the same development, or by way of cash from Maju Holdings. (The Edge Daily)  

Source: Mplus Research - 29 Oct 2018