Looking Dicey Again

• The FBM KLCI (-0.8%) erased all its previous session’s gains on fresh concerns over the U.S. Federal Reserve’s hawkish remarks over the future interest rates direction. The key index consequently erased all its weekly gains to close 0.3% W.o.W lower. The lower liners – the FBM Small Cap (-0.9%), FBM Fledgling (-0.3%) and FBM ACE (-1.6%) all trended lower, while the broader market was painted in red.

• Market breadth turned negative as decliners overpowered advancers on a ratio of 567-to-244 stocks. Traded volumes sank 27.1% to 1.65 bln shares as investors turned risk-off amid the renewed market volatility.

• More than two-thirds of the key index constituents fell, dragged down by Petronas Dagangan (-RM1.00), followed by MISC (-52.0 sen), PPB Group (-30.0 sen), Hong Leong Financial Group (-20.0 sen) and Nestle (-20.0 sen). Among the biggest decliners on the broader market include Fraser & Neave (-94.0 sen), Ajinomoto (-50.0 sen), KESM Industries (- 48.0 sen), Heineken (-36.0 sen) and Allianz (-28.0 sen).

• Notable gainers on the broader market were MPI (+60.0 sen), LPI Capital (+30.0 sen), Lysaght Galvanized (+20.0 sen), Dufu Technology (+11.0 sen) and BAT (+10.0 sen). There were only four advancers on the key index –Petronas Gas (+6.0 sen), Tenaga (+6.0 sen), Sime Darby Plantations (+5.0 sen) and Genting (+5.0 sen).

• Asian benchmark indices took a beating last Friday as investors digested the hawkish tone from U.S. Federal Reserve remarks on future rate hikes. The Nikkei sank 1.1%, while the Hang Seng Index tumbled 2.5%. The Shanghai Composite slipped 1.4% to close below the 2,600 psychological level after the October’s Producer Price Index grew 3.3% Y.o.Y – the weakest reading since March 2018. ASEAN equities, meanwhile, closed broadly lower last Friday.

• U.S. stockmarkets trended lower to end the week, dragged down by the renewed selloff in technology stocks, coupled with the sliding crude oil prices. The Dow fell 0.8%, while the S&P 500 slipped 0.9% to close below the 2,800 psychological level. The Nasdaq, meanwhile, sank 1.7%.

• European equities closed mostly lower as both the FTSE and CAC slipped 0.5% each on weakness in banking stocks amid worries over Italy’s troubled economy. The DAX (+0.02%), however, outperformed its regional peers after recovering all its intraday losses.

The Day Ahead

• Last Friday’s market weakness has turned its head on the FBM KLCI’s recovery prospects and has once again left a sour note on its immediate outlook. As a result, the ongoing uptrend is again under threat amid the continuing concerns in global trade and the economic outlook. Back home, there are also few positive catalysts for market players to follow.

• With the near term outlook remaining shaky, we think the weakness spell on Bursa Malaysia will prolong that could see the key index retracing back to the psychological 1,700 points support level. As it is, the buying interest is still weak and the continuing market wariness is likely to leave most market players on the sidelines for longer and if the above support gives way, the FBM KLCI could retest the 1,680 level. The immediate hurdle is at the 1,710-1,720 levels.

• Similarly, we see the lower liners and broader market shares likely to endure another choppy session in view of the continuing uncertainties in the Malaysian stockmarket. We think most retail players will continue to be cautious of the near term market direction and will remain on the wayside for now.

COMPANY BRIEF

• Straits Inter Logistics Bhd has acquired 38.0% equity stake in Hong Kong bunker trader, Banle Energy International Ltd for RM15.0 mln to be satisfied with the issuance of new shares at 23.5 sen apiece. Subsequently, the group has inked signed a Heads of Agreement (HoD) with Banle to explore potential business cooperation and/or collaboration opportunities to further expand their oil bunkering business geographically. (The Star Online)

• Pintaras Jaya Bhd has secured a RM45.0 mln contract from China Construction (South Pacific) Development Co Pte Ltd to undertake piling works for a proposed eight-storey industrial factory in Singapore.

• The contract was awarded to its Singapore-based wholly-owned subsidiary, Pintary International Pte Ltd, from China Construction (South Pacific) Development Co and will take six months to complete from 1st November 2018. (The Edge Daily)

• Sapura Energy Bhd has completed the disposal of half of its exploration and production (E&P) unit, Sapura Upstream Sdn Bhd, to Austrian oil and gas (O&G) outfit OMV Aktiengesellschaft (OMV) for US$540.0 mln, of which part of the proceeds will be used to repay its debt.  Sapura and OMV also inked a jointventure (JV) agreement for the strategic partnership on 9th November 2018 as a follow-up to a Heads of Agreement (HoA) signed between the two parties on 12th September 2018. (The Star Online)

• Caely Holdings Bhd is planning to acquire three parcels of freehold land in Penang for RM30.9 mln for a residential and commercial project which would position the Group as an upcoming property developer in Penang. The three parcels of land measure about 21,106.89 sq. m. in total. (The Edge Daily)

• Marco Holdings Bhd is acquiring a 40.4% stake in Time Galerie (M) Sdn Bhd for RM26.7 mln cash, as part of its strategy of diversifying into other related businesses with growth prospects. (The Edge Daily)

• Symphony Life Bhd’s proposed one-forone rights issue to raise up to RM146.1 mln was undersubscribed by 9.5%. The rights shares and additional Warrants B are expected to be listed and quoted on the Main Market of Bursa Malaysia on 15th November 2018. (The Edge Daily)

• Eastern & Oriental Bhd 2QFY19 net profit fell 4.3% Y.o.Y to RM18.8 mln, from RM19.7 mln in the same quarter in FY18, mainly due to lower revenue, higher finance costs and shared losses from a joint-venture. Revenue, meanwhile, was down by 8.4% Y.o.Y to RM179.4 mln, from RM195.9 mln last year.

• Cumulatively, 1HFY19 net profit slipped 19.5% Y.o.Y to RM33.0 mln, from RM40.9 mln earlier, despite a marginal gain in revenue to RM379.4 mln (+2.7% Y.o.Y), compared to RM369.3 mln a year ago. (The Edge Daily)

• OSK Ventures International Bhd (OSKVI) has emerged as a significant shareholder in a newly merged entity known as SESAMi-Capital Match that provides fully-integrated supply chain financing solution to corporates.

• The merger is between SESAMi Holding — the largest e-procurement platform in Singapore, and Capital Match Holdings — the leading invoice financing platform present in Singapore and Hong Kong. Both parties had announced their equity merger on 7th November 2018, although OSK did not disclose its shareholding in SESAMi-Capital Match. (The Edge Daily)  

Source: Mplus Research - 12 Nov 2018