Dour Trend To Return

• The FBM KLCI reversed Tuesday’s losses and closed on an upbeat tone owing to buying-support in selected blue-chips, although gains were capped by the weakness in energy stocks, in-tandem with lower crude oil prices. The lower liners also followed suit – led by the FBM Small Cap (+1.2%), the FBM Fledgling (+0.9%) and the FBM Ace (+1.4%). On the broader market, all the sub-sectors advanced with the exception of the Energy (-1.8%) sector.

• Market breadth, meanwhile turned positive as winners trumped losers on a ratio of 502-to-329 stocks. Traded volumes, however, erased 17.4% to 1.87 bln shares as investors retreat to the sidelines to await further developments from the U.S. Federal Reserve meeting.

• Leading the Main Board higher were Genting-linked counters like Genting (+30.0 sen) and Genting Malaysia (+23.0sen) after it was announced that the Genting theme park will be completed in early 2019. Other blue-chip movers were Nestle (+RM1.00), Public Bank (+40.0 sen) and Sime Darby Plantation (+33.0 sen). Broader market chart-toppers, meanwhile, include BAT (+RM1.92), Fraser & Neave (+56.0 sen), Padini (+25.0 sen), Petron Malaysia (+24.0 sen) and Hengyuan Refining (+19.0 sen).

• Broader market losers include Kumpulan H&L High-Tech (-19.0 sen), Dutch Lady (- 14.0 sen), Vitrox (-14.0 sen), Yinson Holdings (-11.0 sen) and Aeon Credit (- 10.0 sen). Meanwhile, O&G-related bluechips like Dialog (-20.0 sen), Petronas Dagangan (-12.0 sen) and Petronas Gas (- 8.0 sen) weighed on the local bourse, together with Hartalega (-2.0 sen) and KLCC (-2.0 sen).

• Japanese stockmarkets closed lowerfollowing the disappointed IPO debut of SoftBank on the Tokyo Exchange. The Nikkei lost 0.6% for the second-straight day, dragged down by losses in the utilities (-4.4%) and energy (-3.4%) sectors. The Shanghai Composite also fell 1.1% to close below the 2,600.0 psychological level, although the Hang Seng gained 0.2%, while most of the ASEAN stockmarkets ended higher.

• Major indexes were beaten down to their intraday lows on Wednesday after the U.S. Federal Reserve raised interest rates by 25 basis points and trimmed prospective 2019 rate hikes to two, from three previously. The Dow (-1.5%) marked a new low this year after falling more than 350 points – led by losses in tech giants, while on the broader market, the S&P 500 and the Nasdaq also erased 1.5% and 2.2% respectively.

• European equities were mostly higher after the EU and Italy struck a new budget deal, giving investors a breather from its ongoing political unrest. The CAC gained 0.5%, lifted by major banking stocks. Meanwhile, the FTSE and the DAX also added 1.0% and 0.2% respectively.

THE DAY AHEAD

• Although the recovery on Bursa Malaysia was stronger-than-expected yesterday, the outlook is turning dour again after the Federal Reserve raised interest rates again that could renew pressure on Malaysia stocks. This also follows the negative reaction to the higher interest rates on Wall Street that is likely to also spread to Malaysian stocks.

• Apart from the above concern, there remains little headway in the U.S.-China trade talks, while oil prices are still at year lows with few signs a recovery asyet. All these concerns could continue to weigh on market sentiments and leave more market players on the sidelines for longer. Consequently, we see quick profit taking activities taking hold over the near term that could send the key index back to the 1,650 support, but if it gives way, the next support of 1,640 will come into play.

• Elsewhere, we also see stocks in the FBM Small Cap, Fledgling and ACE Market stocks succumbing to profit taking actions amid the return of the cautious market condition. Already, the market interest is thin and the wariness is likely to keep retail players at bay for an extended period.

MACRO BRIEF

• Malaysia's consumer price index (CPI) rose 0.2% Y.o.Y in November 2018, lifted by higher prices for housing, water, electricity, gas and other fuels (+2.0% Y.o.Y), education (+1.4% Y.o.Y), restaurants and hotels (+1.2% Y.o.Y), food and non-alcoholic beverages (+1.1% Y.o.Y), and alcoholic beverages and tobacco (+1.0% Y.o.Y). On a monthly basis, CPI increased 0.2% M.o.M. CPI for the period from January to November 2018 registered an increase of 1.0% Y.o.Y. (The Edge Daily)

COMPANY BRIEF

• ASP Datuk Muhamad Umar Swift will succeed Datuk Seri Tajuddin Atan as the CEO of Bursa Malaysia Bhd, effective 11th February 2019. The Securities Commission had concurred with the appointment in accordance with Section 10 of the Capital Markets and Services Act 2007.
• Umar, who is currently the Group CEO and Group Managing Director of MAA Group Bhd, is a Chartered Accountant and has over 22 years of experience in the areas of banking and financial services. (The Star Online)
• George Kent (Malaysia) Bhd’s 3QFY19 net profit declined 28.3% Y.o.Y to RM20.6 mln, due to lower contribution from the engineering segment. Revenue for the quarter fell 18.5% Y.o.Y to RM103.6 mln.

• For 9MFY19, cumulative net profit slipped 8.1% Y.o.Y to RM66.7 mln. Revenue for the period decreased 28.7% Y.o.Y to RM316.2 mln. An interim dividend of 1.5 sen a share was declared. (The Star Online)

• Tenaga Nasional Bhd (TNB) will announce the details of its plan to enter the broadband services market in January 2019. TNB is planning to enter broadband market by utilising its existing fibre optic network across the nation and it is currently running a pilot project in Melaka.

• Meanwhile, TNB also launched its TNB corporate integrity management system handbook as part of its efforts to strengthen integrity among its employees. (Bernama)

• Berjaya Corporation Bhd’s (Bcorp) Executive Chairman, Tan Sri Vincent Tan Chee Yioun has announced a slew of corporate exercises, including the potential listing of U Mobile Sdn Bhd by2020 in the local bourse, as well as floating his hotel entity on the Singapore Exchange (SGX). He plans to carve out the group’s hotel business from Berjaya Land Bhd (BLand) and list it on the SGX, while delisting Berjaya Land Bhd. He also plans to sell his shareholding in 7-Eleven Holdings Bhd to BCorp.

• Additionally, the group is in talks to sell its Four Seasons Hotel and Hotel Residences Kyoto in Japan, which is expected to have a disposal gain of up to US$400.0 mln. On Berjaya Media Bhd, he is identifying one of his profitable privately-owned businesses to be injected into the entity. (The Edge Daily)

• Malaysian Resources Corporation Bhd (MRCB) has received RM1.07 bln from the Employees Provident Fund (EPF) for its 80.0% subscription in Bukit Jalil Sentral Property Sdn Bhd (BJSP), the special purpose joint venture company undertaking the development of Bukit Jalil Sentral. The development, which measures 76.1 ac., is a mixed development project with a GDV of RM21.0 bln. MRCB’s will retain a 20.0% equity interest. (The Edge Daily)

• AirAsia Group Bhd has called on regulators and policy makers to reject and rescind the decision by Malaysia Airports Holdings Bhd (MAHB) to raise the passenger service charge (PSC) to RM73 from RM50 previously. AirAsia has reported that the overall tourism sector, one of Malaysia's biggest revenue earners is being threatened by MAHB's price hikes. (The Edge Daily)

• Mclean Technologies Bhd’s units havebeen ordered by a court to pay RM3.2 mln in damages to Petronas Gas Bhd for unlawful entry into the latter’s land. DWZ Industries (Johor) Sdn Bhd and DWZ Industries Sdn Bhd, who were sued in 2016, were also ordered to pay interest at 5.0% per annum from the date of loss until full payment and costs totalling RM100,000. An injunction was also issued to the DWZ entities to bar them from entering the land, construct any piping or structure on it, and discharging any effluents there. (The Edge Daily)

• Chuan Huat Resources Bhd is seeking to clinch a deal to supply building materials worth up to RM200.0 mln for a project in Kuala Lumpur with a gross development value of over RM2.50 bln. It’s unit has signed a Memorandum of Understanding (MoU) with Akisama Construction Sdn Bhd (ACSB) and Impianika Development Sdn Bhd (IDSB) to serve the above purpose. Under the MoU, IDSB has also agreed to sell to Chuan Huat, six units of shop offices for RM15.6 mln. (The Edge Daily)

Source: Mplus Research - 20 Dec 2018