Looking To Slide Further

• The FBM KLCI finished in the red, alongside its regional peers, as investors digested the latest monetary policies from key central banks. The lower liners slipped into the negative territory with the FBM Ace (-1.3%) being the worst hit. The broader market, meanwhile, ended mostly lower except for the Industrial Products and Services (+0.3%), Property (+0.1%), Energy (+0.5%) and Telecommunication and Media (+0.2%) sectors.

• Market breadth was downbeat as losers overtook winners on a ratio of 463-to-334 stocks. However, traded volumes rose 6.9% to 2.0 bln shares on renewed selling pressure in equities following higher U.S. borrowing costs.

• Significant key-index decliners include Maxis (-22.0 sen), Hong Leong Financial Group (-20.0 sen), Petronas Dagangan (- 20.0 sen), Petronas Gas (-20.0 sen) and IHH Healthcare (-14.0 sen). Other underperforming stocks, meanwhile, were Dutch Lady (-94.0 sen), United Plantations (-34.0 sen), Bintulu Port (- 17.0 sen), Sam Engineering (-16.0 sen) and Kian Joo Can (-14.0 sen).

• On the brighter side, BAT (+42.0 sen), Fraser & Neave (+30.0 sen), Panasonic Manufacturing (+26.0 sen), BLD Plantation (+22.0 sen) and Vitrox (+21.0 sen) led the broader market higher. Heavyweights that bucked the otherwise downbeat market, meanwhile, were Nestle (+70.0 sen), Dialog (+27.0 sen), Petronas Chemicals (+8.0 sen), PPB Group (+8.0 sen) and Press Metal (+4.0 sen).

• Asian equities continued to spiral downward as investors digested the U.S. Federal Reserve’s fourth interest rate hike for the year. The Nikkei finished 2.8% lower, dragged down by a stronger Yen. Meanwhile, the Shanghai Composite and the Hang Seng pared earlier losses, albeit still closing down by 0.5% and 0.9% respectively. The bulk of the ASEAN bourses were also subdued at Thursday’s close.

• Key U.S. bourses - The Dow (-2.0%), the S&P 500 (-1.6%) and the Nasdaq (-1.6%) continued their descent, dragged down by potentially tighter monetary conditions and weaker-than-expected quarterly corporate results, while the anticipated Christmas rally proves elusive.

• U.K. stocks were mostly down beaten following the Bank of England’s decision to keep interest rates unchanged on expectations of slower global growth and Brexit risks. The FTSE reversed recent gains and closed 0.8% lower on extended selling-pressure in commodities’ stocks. Meanwhile, its regional peers – the DAX (-1.4%) and the CAC (-1.8%) also thinned respectively amid the global risk-off sentiment.

The Day Ahead

• As expected, Malaysian stocks succumbed to quick profit taking activities yesterday after the U.S. Federal Reserve raised interest rates, but found support at the 1,650 level. Going into the last trading day of the week, we see little upside bias after global stocks slid again overnight following the U.S’ fresh accusation of economic espionage against China.

• Already the underlying market sentiment is weak due to the continuing concerns over the sparring between the U.S. and China over trade issues, weak oil prices and subdued economic outlook for 2019 and the latest tiff between the two economic powerhouses will dampen sentiments further. As a consequence, we see the key index potentially sliding back to the 1,640 level and if it gives way, the next support is at the 1,630 points. The resistances are at 1,661 and 1,670 respectively.

• The lower liners and broader market shares are also poised to end the week on a dour note with further downside bias on the horizon. Retail participation remains thin and this is set to continue due to the insipid market conditions that will leave the above listed stocks dour for longer.

COMPANY BRIEF

• Tenaga Nasional Bhd is targeting to increase the number of customers next year through the implementation of the Net Energy Metering (NEM) and the Supply Agreement for Renewable Energy (SARE) schemes. As at August 2018, there are 230 residences, 83 commercial buildings and 39 industry players benefiting from the NEM implementation which began in early 2017. (The Edge Daily)

• E.A. Technique (M) Bhd has bagged two contracts for the supply and operation of vessels worth a collective RM94.5 mln. Of this, RM66.3 mln is a contract from Petroliam Nasional Bhd (Petronas) to provide and operate two units of 40- tonne bollard pull harbour tugs for Kertih Port Sdn Bhd and one harbour tug cum support vessel for Petronas Penapisan (Terengganu) Sdn Bhd. Another RM28.2 mln is from Sungai Udang Port Sdn Bhd for the provision of a 40-tonne bollard pull harbour tug, one multi-purpose mooring boat and two 60-tonne bollard pull harbour tugs. (The Edge Daily)  KKB Engineering Bhd has secured a supplementary contract for the supply and delivery of concrete-lined mild steel pipes and mechanical couplings worth an estimated RM46.7 mln. The contract, which was awarded by CMS Infra Trading Sdn Bhd, a unit of Cahya Mata Sarawak Bhd, entails the supply and delivery of the pipes to JKR Central Unallocated Stores in Tanah Puteh, Kuching. (The Edge Daily)

• Practice Note 17 company YFG Bhd has reported that Atta Group Global Bhd has terminated a RM30.0 mln construction contract that was offered to the group due to corporate and personal guarantee issues. The contract was for the construction of 112 units of 14-storey apartments and eight units of threestorey terrace houses in Butterworth. (The Edge Daily)

• Dagang Nexchange Bhd (Dnex) has proposed to dispose of its 51.0% stake in Forward Energy Sdn Bhd (FESB) to FESB’s Managing Director, Datuk Azmi Abdullah for a nominal sum of RM1.00. Dnex wants to exit FESB as the firm’s operating and other expenses amount to RM2.0 mln annually.

• Azmi and his wife, Datin Zarinah Md Shariff already control 42.3% of FESB, which is primarily engaged in the independent power producer (IPP) business. At the same time, Dnex will be acquiring a 100.0% interest in Forward Energy Generation Ltd (FEGL) from Labuan-incorporated Forward Energy Ltd for RM6.7 mln. (The Edge Daily)

• Aeon Credit Service (M) Bhd's 3QFY19 net profit rose 23.5% Y.o.Y to RM87.1 mln, boosted by improved revenue coupled with stronger interest and fee income. Revenue for the quarter grew 11.6% Y.o.Y to RM348.5 mln.

• For 9MFY19, cumulative net profit gained 22.6% Y.o.Y to RM267.0 mln. Revenue for the period climbed 8.7% Y.o.Y to RM1.01 bln. (The Edge Daily)

• Genting Malaysia Bhd has reported that the outdoor theme park remains a part of its growth plan, but it clarified that the opening date is dependent on the options pursued by the company. This is in contrary to media reports that the outdoor theme park is scheduled to open early 2019. Earlier, Genting Malaysia had filed legal proceedings in the U.S. against Walt Disney Co and Twenty-First Century Fox Inc in response to a partnership termination notice. (The Sun Daily)  

Source: Mplus Research - 21 Dec 2018