More Downside Pressure

• The FBM KLCI (-0.2%) trended lower for the fourth straight session after erasing all its intraday gains. Despite that, the key index managed to halt a four consecutive weeks of decline to close 0.04% W.o.W higher. The lower liners – the FBM Small Cap (-0.5%), FBM Fledgling (-0.2%) and FBM Ace (-1.0%) all remained in the red, while the broader market closed mostly lower.

• Market breadth stayed negative as decliners outrun advancers on a ratio of 427-to-292 stocks. Traded volumes fell 2.6% to 1.91 bln shares amid the negative market sentiment.

• Nestle (-50.0 sen) led the local bourse’ decliners list, followed by KLK (-24.0 sen), Public Bank (-8.0 sen), Petronas Chemicals (-7.0 sen) and Tenaga (-6.0 sen). Among the biggest losers on the broader market include Ajinomoto (-16.0sen), Padini (-16.0 sen), Hong Leong Industries (-16.0 sen), BAT (-14.0 sen) and Heng Yuan (-10.0 sen).

• Notable advancers on the broader market were Fraser & Neave (+72.0 sen), Carlsberg (+36.0 sen), Scientex (+22.0 sen) and LPI Capital (+22.0 sen). Perak Transit added 1.0 sen after obtaining the SC’s approval to transfer to the Main Market of Bursa Malaysia. Meanwhile, Malaysia Airport Holdings (+21.0 sen), Digi (+4.0 sen), Hartalega (+4.0 sen), MISC (+4.0 sen) and Sime Darby Plantations (+2.0 sen) topped the FBM KLCI winners list.

• Asia benchmark indices ended on a mixed note last Friday as the Nikkei (+0.8%) rebounded from a three-day losing streak, lifted by bargain hunting activities. The Shanghai Composite inched 0.03% higher after enduring achoppy trading session, but the Hang Seng Index (-0.4%) extended its losses after erasing all its intraday gains. ASEAN equities, meanwhile, closed mixed last Friday.

• U.S. stockmarkets took another beating after erasing all their intraday gains as the Dow sank 2.2%, dragged down by the weaker-than-expected jobs data. On the broader market, the S&P 500 slipped 2.3% with ten-of-eleven major sectors in the red, while the Nasdaq finished 3.1% lower

• Earlier, European equities ended on a mixed noted as the FTSE and CAC rose 1.1% and 0.7% respectively. The DAX, however, declined 0.2% after sinking into the negative territory in the eleventh trading hour as investors kept an eye on the replacement for German Chancellor Angela Merkel.

THE DAY AHEAD

• The start of the new week brings is likely to bring little cheer for market participants as the downside bias remains firmly entrenched as most global stocks remained on the defensive at the end of last week. As it is, geopolitical concerns are still rising between the U.S. and China even as the trade war concerns stay at the backburner that will keep most market players on a cautious mode for longer.

• On Bursa Malaysia, there are also few noteworthy leads for market players to follow and with global equities remaining unexciting, the odds of a year-end rally for Malaysian stocks are becoming more difficult. In the meantime, we think the key index will continue to head down and the 1,680 support level is looking increasingly precarious with the next support at the 1,670 level coming intoplay. The resistances are at 1,690-1,700 levels.

• Elsewhere, broader market stocks and the lower liners are also facing further downside pressure amid the lack of leads that is also keeping most retail players on the sidelines. Already, the FBM Small Cap index is at its year low and the FBM Fledgling and ACE Market indices are also looking to head towards their year low due to the ongoing weak market sentiments.

COMPANY BRIEF

• Three of Scomi Group Bhd’s subsidiaries, Scomi Engineering Bhd (SEB), Scomi Rail Bhd (SRB) and Scomi Transit Project Brazil (Sao Paolo) Sdn Bhd (STPB), have applied for judicial management at the Shah Alam High Court on 7th December, 2018 to protect them from legal proceedings for unidentified parties.

• The judicial management is a corporate rescue mechanism that provides a rehabilitation framework to give companies that are in financial distress an opportunity to be rehabilitated by temporarily shielding them from legal proceedings by third parties. (The Star Online)

• YTL Corp Bhd is planning to acquire Spanish firm SOL HTL Project, which owns a freehold property in Madrid that will be refurbished and converted into a 200-room hotel that will operate under the Marriot International Inc's EDITION brand, for 220 mln euros (equivalent to RM1.04 bln).

• The price tag includes payment for loans that SOL HTL owes to the seller of the company, KKH Property Investors SLU. The acquisition is expected to be funded by borrowings and/or internal funds. (TheEdge Daily)

• Astro Malaysia Holdings Bhd (Astro) is giving a voluntary exit option (VSS) to all its employees in a bid to strengthen its market position in a media and entertainment industry that is facing “an unprecedented rate of disruption". The proposed VSS will allow Astro to simplify the organisation, enhance operational efficiency and reduce annual operating expenses.

• Moving forward, Astro is expected to save about 15.0% (or around RM80.0 mln) in staff costs per year, from the VSS programme. Astro’ staff costs stood at RM590.0 mln in 2018. (The Star Online)

• D’Nonce Technology Bhd is suing its former Managing and CEO, Law Kim Choon for allegedly committing fraud and conspiracy and of breaching fiduciary duties. Other defendants in the suit are Lin Kath Sdn Bhd, Ferummas Precision Engineering (M) Sdn Bhd and Stride Electronics (Malaysia) Sdn Bhd. (The Edge Daily)

• The High Court has dismissed T7 Global Bhd’s RM20.0 mln suit against its former Managing Director, Datuk Harzani Azmi and ex-Executive Director, Tan Wee Koh for breaches of fiduciary duties, negligence and breach of trust. The charge was in relation to the group’s acquisition of the balance 49.0% equity stake in Gas Generators (M) Sdn Bhd in 2013 for RM34.3 mln. (The Edge Daily)

• Meda Inc Bhd has proposed a private placement of up to 10.0% of its total issued shares, together with a proposed share issuance of a similar quantum, to fund its Malaysia Tourism City project in Kuala Linggi, Alor Gajah, Melaka.

• The company expects to raise gross proceeds of up to RM37.4 mln. About RM30.9 mln will be used to fund thedevelopment in Kuala Linggi, where it has 622 ac. of land. (The Edge Daily)

Source: Mplus Research - 10 Dec 2018