Selling Pressure May Ease

• Tracking the sharp decline on Wall Street, the FBM KLCI (-1.0%) registered its fifth straight session of decline after hovering in the negative territory for the entire trading session. The lower liners – the FBM Small Cap (-1.5%), FBM Fledgling (- 1.4%) and FBM Ace (-1.9%) all took a beating, while the broader market was painted in red.

• Market breadth stayed negative as decliners thumped advancers on a ratio of 612-to-194 stocks. Traded volumes, however, rose 38.7% to 2.65 bln shares as the selling activities intensified.

• Leading the FBM KLCI decliners list were Hong Leong Financial Group (-50.0 sen), followed by Hong Leong Bank (-30.0 sen), KLK (-24.0 sen), Genting (-21.0 sen) and Sime Darby Plantation (-21.0 sen). Consumer products stocks like Fraser & Neave (-66.0 sen), BAT (-58.0 sen),Ajinomoto (-54.0 sen) and Carlsberg (- 34.0 sen) were among the biggest losers on the broader market. Top Glove sank 35.0 sen after being accused of abusing migrant workers’ rights.

• Among the biggest advancers on the broader market include Heineken (+30.0 sen), LPI Capital (+10.0 sen), Pintaras (+10.0 sen) and Enra Group (+9.0 sen). Padini added 9.0 sen, snapping a six-day losing streak. There were only three gainers on the local bourse – Petronas Dagangan (+50.0 sen), Nestle (+40.0 sen) and IHH (+4.0 sen).

• Asia benchmark indices trended sharply lower, dragged down by concerns over global economic growth amid the weakerthan-expected U.S. jobs data. The Nikkei slipped 2.1%, while the Hang Seng Index (-1.2%) retreated for the fourth straight session. The Shanghai Composite (-0.8%)ended below the 2,600 psychological level. ASEAN equities, meanwhile, was splashed in red on Monday.

• U.S. stockmarkets recovered all their intraday losses as the Dow rose 0.1% after investors shifted their focus on the upcoming U.S. Federal Reserve meeting that is widely anticipated to raise interest rates. On the broader market, the S&P 500 gained 0.2%, anchored by the technology sector (+1.4%), while the Nasdaq added 0.7%.

• Earlier, European equities – the FSTE (- 0.8%), CAC (-1.5%) and DAX (-1.5%), all took a beating after British Prime Minister Theresa May confirmed a decision to postpone a vote on her plan for Brexit. Market weakness was further compounded by Bank of France’s remark of the country’s potential weaker-thanexpected GDP data.

THE DAY AHEAD

• Although we expected stocks on Bursa Malaysia to retreat yesterday, the falls were steeper-than-expected amid an intensifying selling spree that also sent the key index to its lowest level in five months.

• As it is, market sentiments remain weak due to the escalating trade and political tensions between the U.S. and China that threatens to boil over with the sides each ramping up rhetoric. However, with the key index approaching its year low and with the market tipping into the oversold territory, we think a rebound is already due.

• The slight positivity in the U.S. markets overnight could provide some reprieve for Malaysia stocks, albeit we think that any rebound is likely to be contained due to the prevailing cautious market undertone.Hence, we think the 1,670 level could be a stiff near term hurdle that is followed by the 1,680 level. The supports are at 1,666 and its July low of 1,657.

• However, the broader market remains in a state of flux as indices like the FBM Small Cap continues to post fresh year lows and the near term outlook remains frail as market players are still staying on the sidelines. Although the lower liners are already due for a rebound from oversold, the weak market conditions are likely to keep a lid on their performance over the near term.

COMPANY BRIEF

• Top Glove Corp Bhd‘s Chairman, Tan Sri Dr Lim Wee Chai said that Top glove’s operations are running as usual and its supply with the UK’s National Health Service (NHS) were not affected, despite allegations of forced labour made in the UK’s The Guardian newspaper yesterday.

• Lim called the news report inaccurate and clarified that contributions from supply to the UK’s NHS are minimal to Top Glove. (The Edge Daily)

• Prestariang Bhd has announced that it has not received any notice of default from the Government relating to the cancellation of the Immigration Department's RM3.5 bln National Immigration Control System (SKIN) concession.

• To recap, the group was appointed by the Government in 2017 to implement the replacement for the Malaysian Immigration System (myIMMs) by 2020. However, Home Minister Tan Sri Muhyiddin Yassin was reported to have said that the Government would cancel the SKIN concession to make way for the development of a new system that iscomprehensive, effective and user friendly. (The Star Online)

• Tenaga Nasional Bhd (TNB) is planning to subscribe to a Compulsorily Convertible Debenture (CCD) for 2.26 bln rupees (RM133.2 mln) to facilitate its direct investment in the construction of a hydroelectric power plant in India.

• The CCD is issued by GMR Bajoli Holi Hydropower Pvt Ltd (GBHH), which is constructing the 180MW run-of-river plant within the Himalaya Range in the State of Himachal Pradesh, slated to commence commercial operations by October. The proposed investment is inline with its strategy to grow its portfolio of energy assets in India. (The Edge Daily)

• Scientex Bhd is issuing 25.3 mln new shares to satisfy the proposed acquisition of a 42.4% equity stake in Daibochi Bhd. A conditional share sale agreement (CSSA) was inked yesterday with certain shareholders of Daibochi Bhd for the RM222.5 mln deal.

• However, Scientex, which is keen to extend a mandatory general offer (MGO) for the remaining stake in Daibochi after the acquisition, has yet to decide whether to acquire the remaining stake by cash or a further issuance of new shares in Scientex. (The Star Online)

• Kumpulan Perangsang Selangor Bhd (KPS) plans to raise up to RM500.0 mln via an Islamic Medium Term Notes Programme to fund general corporate purposes and refinance the group's existing borrowings. The sukuk programme has a tenure of up to 15 years. (The Star Online)

• MAA Group Bhd is disposing all the 24.3 mln shares (or approximately 48.0% stake) it owns in Australian-based retail mortgage and loan securitisationcompany, Columbus Capital Pty Ltd (CCA) for A$21.0 mln (RM63.0 mln).

• The shares are held under Columbus Capital Singapore Pte Ltd (CCS), which is a sub-subsidiary of MAA. CCS is held under MAA International Investments Ltd, which is wholly owned by MAA Corp Sdn Bhd, which is in turn wholly owned by MAA.

• The group will be selling its stake to Consortia Group Holdings Pty Ltd, which is expected to be completed by 20th December 2018 and reap a gain of RM7.7 mln. (The Edge Daily)

• Malaysia Airports Holdings Bhd (MAHB) recorded 4.3% Y.o.Y more passengers in November compared with the same period a year ago, with traffic boosted by growth from both international and domestic passenger movements.

• A total of 8.3 mln passengers passed through the 39 airports it operates in Malaysia last month, compared with 7.9 mln in November 2017. The international sector also recorded growth of 4.0% to 4.3 mln passenger movements, while the domestic sector was up 4.6% to 4.0 mln passengers. (The Edge Daily)

Source: Mplus Research - 11 Dec 2018