• The Main Board see-sawed on Monday, albeit closing with meager gains owing to last-minute buying-support in selected heavyweights. All the lower liners - the FBM Small Cap, the FBM Ace and the FBM Fledgling, however, slipped into the red, while more than half of the broader market constituents retreated.

• Market breadth was dull as decliners more than doubled the advancers, although traded volumes gained slightly by 1.3% to 1.85 bln shares on the back of renewed selling pressure in the lower liners.

• Blue-chip counters which supported the gains on the key-index were Nestle (+RM1.20), IHH Healthcare (+26.0 sen), Digi (+10.0 sen), Genting (+6.0 sen) and Sime Darby (+6.0 sen). Other charttoppers include Litrak (+28.0 sen), UEM Edgenta (+16.0 sen), Cahya MataSarawak (+15.0 sen) and United Plantations (+14.0 sen). Computer Forms also gained 20.0 sen after receiving a takeover offer from its substantial shareholder, Tan Sri Robert Tan Hua Choon.

• Meanwhile, Dutch Lady (-58.0 sen), Carlsberg (-40.0 sen), Vitrox (-38.0 sen), MSM Malaysia (-25.0 sen) and Apollo Food (-20.0 sen) weighed on the broader market. Banking heavyweights like Hong Leong Financial Group (-22.0 sen) and Maybank (-17.0 sen) took the worse beating followed by Press Metal (-8.0 sen), IOI Corporation (-6.0 sen) and MISC (-5.0 sen).

• The Hang Seng index (+0.4%) bucked the general downtrend and outperformed its peers on Monday’s close after paring earlier losses on gains in utilities and industrials-linked stocks. On thedownside, the Nikkei (-0.2%) and the Shanghai Composite (-2.2%) remained lackluster alongside most ASEAN stockmarkets.

• U.S. equities were beaten down on Monday, following a volatile session as the Dow (-1.0%) swung over 900 points on renewed fears of intensifying trade conflict with China. Meanwhile, techheavy indices like the S&P 500 (-0.7%) and the Nasdaq (-1.6%) also pulled back amid the extended selldown in FAANG stocks.

• Earlier, key European benchmark indices closed higher as investors digested Chancellor Angela Merkel’s decision to step down as a German chancellor in 2021, as well as gains in auto and banking stocks. The FTSE added 1.3% - led by gains in HSBC after the banking group’s results beat analysts’ estimates. Meanwhile, the DAX and the CAC also followed suit, adding 1.2% and 0.4% respectively.

The Day Ahead

• Despite closing on a mildly positive note yesterday, the Malaysian stockmarket is still seeing scant signs of a rebound even as it is becoming increasingly oversold after the recent rout that has seen the FBM KLCI fall 67 points or 3.6%.

• As it is, the general market conditions are little changed with the insipid trend still dominating amid concerns over the direction of global trades and slower economic growth outlook for 2019. Back home, market players are also wary of the unveiling of the upcoming Budget 2019 at the end of the week that may see the introduction of new taxes as the government attempts to plug its fiscal shortfall, as well as potentially more spending cuts. Hence, the Budget is unlikely to provide fresh buying impetus for a sustained recovery. Consequently, we think the key index is likely to drift further over the near term with local institutions providing support to keep the key index above the 1,680 level for now. The other support is at 1,670, while the main resistance is at 1,700.

• The lower liners and broader market indices are still looking frail as more players are on the wayside in view of the uncertain market conditions. This trend is set to continue as there is few positive catalysts to entice retail players back into the market for the time being.

COMPANY BRIEF

• Seacera Group Bhd, in a reply to Bursa Malaysia's query over the unusual market activity, said that the sharp fall in its stock's share price in recent trading was due to forced stake sales on its major shareholders. Its three major shareholders, namely Datuk Seri Mansor Masikon, Zulkarnin Ariffin and Datuk Ismail Osman, were forced to sell down their stakes in the company by banks and stockbroking firms.

• The group's share price had plunged over the last two days of the previous trading week, shaving off 14.5 sen or 48.0% of its value from Wednesday's closing price of 30 sen. (The Star Online)

• A jointly-owned unit of Gamuda Bhd and MMC Corp Bhd has been served an arbitration notice relating to the 329 km Electrified Double Track Project (EDTP) between Ipoh and Padang Besar by Emrail. The arbitration notice is premised on Emrail’s alleged dispute arising out of the conditions of contract dated 23rd December 2010 for the construction, completion, testing, commissioning and maintenance of track works for the EDTP.(The Edge Daily)

• MISC Bhd’s 51.0%-owned joint venture with PetroVietnam Technical Services Corporation has won a time charter contract to lease a floating storage and offloading vessel for US$176.0 mln (RM735.0 mln). Idemitsu Kosan Co Ltd will lease the FSO for seven years, with the charter expected to commence by mid-2020. (The Edge Daily)

• TMC Life Sciences Bhd’s 4QFY18 net profit rose 2.2% Y.o.Y to RM11.3 mln on lower total operating expenditure, higher patient load and higher intensity of cases handled. Revenue for the quarter gained 9.9% Y.o.Y to RM43.2 mln.

• For FY18, cumulative net profit added 7.8% Y.o.Y to RM28.1 mln. Revenue for the year grew 11.4% Y.o.Y to RM169.0 mln. A single-tier final dividend of 1.8% or 0.183 sen was declared. (The Edge Daily)

• Subsidiaries of Scomi Group Bhd have been served a notice of demand for US$19.1 mln (RM79.8 mln) by the ExportImport Bank of Malaysia (EXIM) over the failure to pay the amount due under bank facilities. Scomi Transit Projects Brazil (Sao Paulo) Sdn Bhd (STPB), a whollyowned unit of Scomi Engineering Bhd (SEB), which is in turn a wholly-owned unit of the Scomi group, had been the borrower while SEB had acted as its guarantor. (The Edge Daily)

• Sapura Resources Bhd has partnered with Dilog Training and Services Sdn Bhd to collaborate for the provision of maintenance, repair and overhaul (MRO) services for narrow body commercial aircraft in Senai, Johor. Sapura’s whollyowned unit, Mercu Sapura Sdn Bhd (MSSB), signed a joint venture (JV) and shareholders agreement today with Dilog. MSSB also intends to offer a call option for an equity interest of up to 29.0% in the JV company to Invation Aero Sdn Bhd, a joint venture between Sapura AeroSdn Bhd, another fully-owned unit, and Destini Aviation Sdn Bhd, a wholly-owned unit of Destini Bhd. (The Edge Daily)

• Vizione Holdings Bhd’s 1QFY19 net profit leapt 28.4x Y.o.Y to RM15.0 mln, thanks to higher contributions from construction projects arising from the group’s subsidiary, Wira Syukur (M) Sdn Bhd (WSSB) that was acquired by the group on 9th October 2017. Revenue for the quarter soared 747.5% Y.o.Y to RM159.5 mln. (The Edge Daily)

• Cuscapi Bhd has filed a counter claim suit against former CEO, Her Chor Siong and Hitachi Systems Digital Services (Singapore) Pte Ltd for allegedly engaging in a scheme to defraud and cause losses to the group. Also named in the counter claim by Cuscapi (along with its subsidiary Cuscapi Malaysia Sdn Bhd) is Hitachi Systems’ CEO Ong Chin Hui, who was a shareholder of Cuscapi at the material time. (The Edge Daily)

• iDimension Consolidated Bhd’s external auditors have expressed an adverse opinion on its audited financial statements for the 1H2018, triggering the Guidance Note 3 (GN3) status. The group’s external auditors, BDO had disagreed with the decision made by iDimension’s board to treat its subsidiary, IDB Interactive Sdn Bhd as a pure investment as opposed to a subsidiary to be consolidated.

• However, iDimension believed it had acted in the fiduciary interests of the company and its shareholders by deconsolidating IDB’s financial statements as it could not corroborate or verify their accuracy. (The Edge Daily)  

Source: Mplus Research - 30 Oct 2018