Remaining Positive

• The FBM KLCI (+1.2%) started off the month on a firm note as the key index gapped-up to close a hair below the 1,700 psychological level. Similarly, the lower liners – the FBM Small Cap (+2.0%), FBM Fledgling (+0.3%) and FBM Ace (+2.2%) all rebounded, while the broader market closed higher, led by the Energy sector (+2.9%).

• Market breadth turned positive as advancers outstripped decliners on a ratio of 568-to-338 stocks. Trade volumes, however, fell 18.5% to 2.52 bln shares as trading activities normalised from the previous session’s month-end institutional portfolio rebalancing.

• More than two-thirds of the key index’s constituents rose, led by Axiata (+32.0 sen) and Petronas Gas (+32.0 sen), followed by Genting (+31.0 sen), Hong Leong Bank (+24.0 sen) and Sime DarbyPlantations (+24.0 sen). Significant gainers on the broader market were semiconductor related stocks like MPI (+92.0 sen), KESM Industries (+60.0 sen) and Inari (+23.0 sen), while UMW and Aeon Creidt added 35.0 sen and 30.0 sen respectively.

• In contrast, notable decliners on the broader market were consumer products stocks like Padini (-37.0 sen), Carlsberg (- 32.0 sen), BAT (-22.0 sen) and Fraser & Neave (-12.0 sen). Destini sank 5.5 sen after reporting a weak set of quarterly earnings. There were only five losers on the local bourse - Nestle (-RM1.40), Petronas Dagangan (-80.0 sen), PPB Group (-60.0 sen), Public Bank (-4.0 sen) and Petronas Chemicals (-3.0 sen).

• Asia benchmark indices rallied after U.S. and China has come to a truce on trade dispute at the G-20 weekend summitmeeting. The Nikkei jumped 1.0%, while the Hang Seng Index surged 2.6% to close above the 27,000 psychological level. The Shanghai Composite soared 2.6% to close above the 2,600 psychological level, while ASEAN equities ended sharply higher on Monday.

• Wall Street rallied overnight as the Dow jumped 1.1% higher after U.S. and China called on a 90-days truce on their trade war at the G-20 summit meeting over the weekend. On the broader market, the S&P 500 gained 1.1% with only the consumer staples sector (-0.1%) underperforming, while the Nasdaq finished 1.5% higher.

• Earlier, European equities – the FTSE (+1.1%), CAC (+1.0%) and DAX (+1.9%), all advanced, taking cue from the global stockmarkets rally. Notable gainers were commodity-related stocks like Antofagasta PLC (+7.9%), Rio Tinto PLC (+2.3%), Royal Dutch Shell PLC (+2.4%) and Total SA FP (+1.3%) after metal and crude oil prices rose.

THE DAY AHEAD

• Yesterday’s market upsides were stronger than expected as the FBM KLCI closed near the 1,700 points after we thought it would be a formidable level to clear. With the key index now tethering near the 1,700 points level and with global equity markets still on a purple patch, we see further near term upsides.

• As it is, Malaysian stocks are taking cue from the positive undertone of overseas indices that are buoyed by the U.S-China truce in their tit-for-tat tariffs on their respective goods. This is giving some breathing space to the markets and could also provide the impetus for Malaysian stocks to mount a year-end rally and window dressing spell. Therefore, we expect the 1,700 points level to bebreached and the key index could take a stab at the 1,710 level over the near term. The other resistance is at 1,705 level, while the supports are at 1,696 and 1,690 respectively.

• The more positive market undertone is also providing some leeway for the broader market shares and lower liners to stage an overdue recovery which could persist as the FBM Small Cap index look to extricate from its year low. Similarly, we also see the other broader stock indices to mount a firmer recovery in line with the current market positivity.

COMPANY BRIEF

• Cycle & Carriage Bintang Bhd will cease to be a substantial shareholder of Mercedes-Benz Malaysia Sdn Bhd after disposing its 66.0 mln (or 49.0% stake) in Mercedes-Benz Malaysia to Daimler AG for RM66.0 mln.

• Following Daimler’s exercise of the call option, Cycle & Carriage will cease to be entitled to the annual dividend from Mercedes-Benz Malaysia of approximately RM11.2 mln, even when Mercedes-Benz Malaysia declares a dividend.

• Mercedes-Benz Malaysia had received a notice dated 30th November 2018, from Daimler stating that the latter has decided to exercise its call option on the shares currently held by Cycle & Carriage. (The Star Online)

• Telekom Malaysia Bhd has appointed Rosli Man as a Non-Independent and Non-Executive Chairman of the telecommunications giant effective immediately. The latter will replace Tan Sri Dr Sulaiman Mahbob who tendered his resignation on 30th November 2018. (The Edge Daily) Reach Energy Bhd‘s initial testing of the exploration well at North Kariman-3 (NK- 3) in its Emir Oil concession block onshore Kazakhstan has yielded positive results. The group announced that the well has been safely and successfully executed as budgeted and that it penetrated the target Mid-Triassic carbonate reservoirs, reaching a total depth of 4,140.66 m. (The Edge Daily)

• Revenue Group Bhd is expected to make enter the Myanmar market early next year through collaborating with the local Myanmar companies. Currently, the group is waiting for approval from the authorities before entering into any partnership there. (The Star Online)

• Genting Malaysia Bhd has appointed former Bank Negara Malaysia executive Chong Kwai Ying as an Independent and Non-Executive director. The latter was at the central bank in various capacities until April 2017, in addition to a short stint at Perbadanan Insurans Deposit Dalam Malaysia (PIDM) as a consultant until earlier this year.

• She is currently an Independent and NonExecutive director of AXA Affin Life Insurance Bhd and China Construction Bank (Malaysia) Bhd. (The Edge Daily)

• Hap Seng Consolidated Bhd is planning to sell two contiguous parcels of land in Tawau, Sabah to Goldcoin Ventures Sdn Bhd for RM24.2 mln. The planned disposals will unlock the value of the land located in non-strategic locations without immediate development potential.

• The proposed disposals will also result in a net gain of RM18.1 mln, which would be used to reduce the group’s borrowings and/or for working capital. (The Edge Daily)

• Signature International Bhd expects to deliver weaker results in FY19, followinga thinner orderbook of RM116.0 mln as at September. The group noted that it has been hit by lower orders due to subdued property market and it does not see sentiment improving anytime soon. (The Edge Daily)

• The second offer by Hovid Bhd’s Managing Director, David Ho Sue San and private equity firm TAEL Two Partners Ltd — via its special purpose vehicle Fajar Astoria Sdn Bhd — to take over the pharmaceutical company has turned unconditional after Bursa Malaysia approved the application for its listing withdrawal on 3th December 2018.

• Meanwhile, the aforementioned parties’ combined shareholdings in Hovid had increased to 87.4%, from 79.1% on 5th October 2018. (The Edge Daily)

• D’nonce Technology Bhd's substantial shareholder, Blackstream Investments Pte Ltd is calling for an Extraordinary General Meeting (EGM) to sack the group's directors as it disagrees with the board's move to lead the group towards a future that only focuses on and raises funds for property development.

• Property development is a new venture for the group and one of three businesses it is in, according to Blackstream, which owns a 21.9% equity stake in the group. D'nonce said it has received the requisition notice to convene the EGM from Blackstream and has engaged its lawyers to provide legal opinion in respect of the notice.

• The board members Blackstream wants to remove are Ang See Ming, Kuah Choon Ching, Lim Kuan Yew, Chee Wai Hong and Lee Eng Sheng. Ang is currently D’nonce's Chairman, while Kuah is the group’s Chief Executive Officer (CEO).

• Blackstream has proposed to appoint Lim Siang Kai, Lam Kwong Fai, Tan Han Bengand Yoong Nim Chor. Siang Kai is a director in Blackstream. (The Edge Daily)

Source: Mplus Research - 4 Dec 2018