Meek End To The Week

• The FBM KLCI (-0.3%) recorded its third straight day of loss as its weakness was in tandem with the negative performance across global stockmarkets. The lower liners – the FBM Small Cap (-1.1%), FBM Fledgling (-0.5%) and FBM Ace (-0.3%) all continue to trend lower, albeit the REITS (+0.1%), Energy (+0.1%) and Telecommunication & Media (+1.3%) sectors outperformed the negative broader market.

• Market breadth stayed negative as decliners thumped advancers on a ratio of 588-to-259 stocks. Traded volumes, however, rose 12.2% to 1.96 bln shares as selling activities across the board intensified.

• More than half-of-the key index constituents were in the red, dragged down by Nestle (-RM2.50), followed by Malaysia Airport Holdings (-21.0 sen),Petronas Gas (-18.0 sen), Tenaga (-16.0 sen) and Hartalega (-15.0 sen). Notable decliners on the broader market were consumer products stocks like Fraser & Neave (-RM1.00), QL Resources (-28.0 sen), BAT (-24.0 sen), Padini (-24.0 sen) and Ajinomoto (-20.0 sen).

• On the other side of the trade, significant gainers on the broader market include United Plantations (+36.0 sen), Litrak (+20.0 sen), MBM Resources (+15.0 sen) and Rapid Synergy (+12.0 sen). Willowglen added 1.5 sen after it secured a one-year contract in Singapore. Key winners on the FBM KLCI were Digi (+16.0 sen), Petronas Chemicals (+6.0 sen), Press Metal (+6.0 sen), Dialog (+5.0 sen) and Maxis (+5.0 sen).

• Asia benchmark indices continue to trend lower after a Chinese tech giant Huawei top executive the arrested in Canada,fueling a potentially deeper trade tension between U.S. and China. The Nikkei (- 1.9%) sank to its lowest level in five week, while the Shanghai Composite slipped 1.7% lower. The Hang Seng (-2.5%) took a beating to close marginally above the 26,000 psychological level, while ASEAN equities were painted in red yesterday.

• U.S. stockmarkets ended mostly lower, dragged down by concern over trade tension between U.S. and China, coupled with the renewed volatility in crude oil prices. Both the Dow and S&P 500 declined 0.3% and 0.2% respectively, but the Nasdaq added 0.4% after clawing its way into the positive territory in the final trading hour.

• Earlier, European equities – the FTSE (- 3.2%), CAC (-3.3%) and DAX (-3.5%), all endured another session of selloff, marking their worst decline since June 2016. Market sentiment was dampened by the arrest of Huawei’s CFO, while investors are also keeping an eye on Italy as it makes a final cost analysis of its scandal-ridden budget.

THE DAY AHEAD

• The key index managed to find support above the 1,680 level yesterday that allowed it to stay within its recent trading range. However, the immediate outlook remains uncertain amid the ongoing geopolitical and trade issues that are still weighing on market sentiments.

• Consequently, we think the downside bias is still prevalent and Malaysian stocks are still at risk of further falls. However, it also appears that any downside could be cushioned by institutional support on selective index linked stocks – which has been the case over the past few sessions to limit the falls. On the downside, the supports remain at 1,680 and 1,670levels, while the resistances are at 1,690 and 1,700 respectively.

• There is also little reprieve for the lower liners and broader market shares as the indices continue to trend lower as investor interest is still on the low side. As it is, the lack of leads is keeping most market players at bay and this will result in the lower liners continuing to drift for now.

COMPANY BRIEF

• AirAsia Group Bhd has inked a Memorandum of Agreement (MoA) with a Vietnamese partner with the intention of setting up a joint-venture (JV) low-cost carrier in Vietnam. The MoA was signed with Thien Minh Travel Joint Stock Company and Hai Au Aviation Joint Stock Company. (Bernama)

• Sapura Energy Bhd’s 3Q2018 net loss narrowed significantly to RM31.1 mln vs. RM274.4 mln a year ago, due to a higher revenue contribution, which added 17.4% Y.o.Y to RM1.50 bln, from RM1.28 bln previously.

• Even so, its 9M2018 net loss had widened to RM292.9 mln, from RM218.0 mln for the same period last year due to lower revenue from its E&C and drilling segments.

• The group had also secured a contract valued at about RM3.0 bln from Oil and Natural Gas Corp (ONGC) in India as part of a consortium to explore an oil block offshore The Godavari Delta in eastern Indian waters. (The Star Online)

• GD Express Carrier Bhd has allocated a higher capital expenditure of RM50.0 mln for FY19, despite acknowledging that the year ahead will be challenging due to intense competition and rising pressurefrom operating costs. (The Edge Daily)

• Perak Transit Bhd has obtained the Securities Commission’s approval to move from its current ACE market listing to the Main Market. The group had met the Main market listing criteria of having an aggregate net profit of RM20.0 mln for the past three financial years and net profit of at least RM6.0 mln in the most recent financial year. (The Edge Daily)

• Telekom Malaysia Bhd and KLCCP Stapled Group Bhd, which comprises KLCC Property Holdings Bhd and KLCC Real Estate Investment Trust, have been replaced by AMMB Holdings Bhd and Top Glove Corp Bhd as constituents of the FBM KLCI in the semi-annual review of the index. (The Star Online)

• UEM Sunrise Bhd expected to meet a similar sales target of RM1.2 bln in FY19, adding that it will monetise its landbanks in Johor and central Kuala Lumpur. The group is looking into launching projects in smaller batches in 1H2019, while keeping larger projects for the year-end. (The Edge Daily)

• Tan Sri Robert Tan Hua Choon’s takeover offer of Computer Forms (Malaysia) Bhd shares at RM1.35 per share has turned unconditional after surpassing the 50.0% ownership benchmark of the group’s voting shares on 6th December 2018. (The Edge Daily)

• Minority shareholders of SMRT Holdings Bhd’s 64.0%-owned unit, N’osairis Technology Solutions Bhd, are suing SMRT for alleged oppression. The minority shareholders alleged that SMRT had used its position as the majority shareholder in N’osairis to oppress the minority shareholders. (The Edge Daily)

Source: Mplus Research - 7 Dec 2018