Minor Gains Seen

• Despite opening higher at the start of the trading bell, the FBM KLCI succumbed to quick profit taking to linger mostly in the negative territory, before closing 0.4% lower yesterday. The lower liners also edged mostly lower as the FBM Fledgling as FBM ACE fell 0.1% and 0.5% respectively, while the broader market closed mixed.

• Market breadth turned negative as decliners outstripped advancers on a ratio of 404-to-366 stocks. Traded volumes fell 7.7% to 2.31 bln shares, dragged down by the negative market sentiment.

• Key losers on the local bourse were Nestle (-RM1.60), Hartalega (-60.0 sen), Petronas Gas (-34.0 sen), Tenaga (-30.0 sen) and MISC (-28.0 sen). Notable decliners on the broader market were Dutch Lady (-50.0 sen), Kossan Rubber (- 37.0 sen), Ajinomoto (-20.0 sen), BAT (- 20.0 sen) and Kluang Rubber (-20.0 sen).

• In contrast, notable advancers on the broader market include MPI (+30.0 sen), Hong Leong Industries (+27.0 sen), Fraser & Neave (+26.0 sen) and Bursa Malaysia (+18.0 sen). Gagasan Nadi Cergas added 0.5 sen on its debut on Bursa Malaysia. Meanwhile, Genting (+25.0 sen), Petronas Dagangan (+20.0 sen), Axiata (+10.0 sen), Hong Leong Bank (+13.0 sen) and Hong Leong Financial Group (+10.0 sen) topped the key index’s advancers list.

• Asia benchmark indices closed mixed as the Nikkei (+0.8%) extended its gains, taking cue from the positive developments on Wall Street overnight. The Hang Seng Index closed 0.2% higher, but the Shanghai Composite fell 0.3% after hovering in the negative territory for the entire trading session. ASEAN stockmarkets, meanwhile, closed mixed yesterday.

• U.S. stockmarkets trended higher for the third straight session as the Dow climbed 1.1% overnight, boosted by the progress in trade talks with China, coupled with higher crude oil prices. On the broader market, the S&P 500 added 1.0% with only the financial sector (-0.2%) underperforming, while the Nasdaq ended 1.1% higher.

• Earlier, major European indices – the FTSE (+0.7%), CAC (+1.2%) and DAX (+0.5%) all recovered all their previous session’s loss, taking cue from the positive sentiment on Wall Street. Meanwhile, European officials are discussing the course of action if U.K. were to request an extension of Article 50 as British Prime Minister Theresa May is believed to have not secured enough votes from the Parliament.

The Day Ahead

• After yesterday’s volatility that resulted in the key index ending the day on a downbeat note, we see some near term reprieve for Bursa Malaysia stocks after gains in most overseas indices overnight that is likely to also buoy local stocks. The positivity was brought about by progress in the trade talks between the U.S. and China.

• As it is, the buying interest on Malaysian shares have remained tepid with few follow-through buying interest to sustain an uptrend. The quick profit taking activities are also leaving the key index to drift which looks to continue due to the still tepid market following, albeit there should be some rebound over the near term. On the upside, the resistances are at 1,680 and 1,690 respectively, while the supports are at 1,670 and 1,650 respectively.  Despite the weaker closing yesterday, the lower liners and broader market shares are continuing to rebound from their extended selloff which we see sustaining over the near term amid the bouts of bargain hunting actions.

COMPANY BRIEF

• Malaysia Marine and Heavy Engineering Holdings Bhd (MMHE) have signed a frame work agreement from Petroliam Nasional Bhd (Petronas) for the provision of engineering, procurement and construction (EPC) of fixed offshore structure works.

• The agreement included two packages, namely fixed offshore structures of weight exceeding 7,500MT (Package A) and fixed offshore structures of weight not exceeding or equal to 7,500MT (Package B). The agreement, valid for six years for both packages, is on a mini bidding basis, applicable to projects being managed under Petronas' Petroleum Agreement Contractors and covers all oil and gas blocks within Malaysia. (The Star Online)

• Top Glove Corp Bhd has concurred that it will take around 1-3 years’ time to turnaround Aspion Sdn Bhd. The group also announced that latter contributes about 10.0% of Top Glove’s revenue per quarter and that contribution from Aspion was relatively small in FY19. (The Edge Daily)

• Hovid Bhd’s Managing Director (MD) David Ho Sue San and private equity firm TAEL Two Partners Ltd — via its special purpose vehicle, Fajar Astoria Sdn Bhd, have secured 94.9% of the pharmaceutical company’s shares at the close of their takeover offer on 8th January 2019. To recap, the takeover offer was initially launched on 9th October, 2017. (The Edge Daily)

• Boustead Plantations Bhd has filed a legal case for RM37.2 mln in claims from a unit of S P Setia Bhd in relation to a refund under the goods and services tax (GST). Acting as the group's trustee, CIMB Islamic Trustees Bhd had filed the claim against Setia Fontaines Sdn Bhd for alleged breach of a sales and purchase agreement (SPA).

• The group is claiming damages totalling RM37.2 mln of GST that was chargeable on the land it sold to Setia Fontaines on 22th December 2016, as well as 8.0% interest per annum. (The Edge Daily)

• Menang Corp (M) Bhd has lost a lawsuit in the Industrial Court in relation to the dismissal of its former Deputy Managing Director and Deputy Chief Executive Officer (CEO) Toh May Fook, of which the court ruled was in breach of the rules of natural justice.

• Subsequently, Menang was ordered to pay RM278,400 to Toh as compensation within 30 days. To recap, Toh was terminated from his posts on 19th July 2016 by Menang’s Former Group MD and CEO, Datuk Eddie Shun Leong Kwong. (The Edge Daily)

• D’Nonce Technology Bhd will undergo an investigative review following the findings of a special investigative audit into transactions made by former Managing Director and CEO, Law Kim Choon.

• Deloitte Corporate Solutions Sdn Bhd was appointed to carry out the investigation. To recap, the group has announced that it will be filing a suit against Law on 7th December 2018 on the basis of alleged fraud and breach of fiduciary duties. (The Edge Daily)

• Sanbumi Holdings Bhd saw 13.1 mln shares or (or 5.8% equity stake) worth RM6.5 mln traded off market yesterday.

• The single block of shares was exchanged in a direct business transaction at 50.0 sen per share, representing an 8.0 sen or 19.0% premium to the group’s closing price of 42.0 sen, which was a more than 20-year high. (The Edge Daily)  

Source: Mplus Research - 9 Jan 2019