• The FBM KLCI opened in the red at the opening bell and remained in the negative territory for the entire session, mainly dragged down by Petronas Chemicals amid its weaker outlook expectations. All the lower liners - the FBM Small Cap, the FBM Fledgling and the FBM Ace gave up earlier gains and closed lower, alongside more-than-half of the broader market constituents.
• Market breadth was grim as losers overtook the winners on a ratio of 557-to- 286 stocks, while traded volumes grew 24.5% to 2.18 bln shares on the back of profit-taking activities across the board.

• Among the decliners on the Main Board were Petronas Dagangan (-60.0 sen), Petronas Chemicals (-35.0 sen), Top Glove (-14.0 sen), Press Metal (-13.0 sen), and Hong Leong Financial Group (-10.0 sen). Broader market losers, meanwhile, were Dutch Lady (-90.0 sen), KESM Industries (-30.0 sen), Malaysian Pacific Industries (-22.0 sen), Amway (-19.0 sen) and Fraser & Neave (-16.0 sen).

• BAT (+40.0 sen), Lingkaran Trans Kota (+26.0 sen), Hong Leong Industries (+21.0 sen), Mega First Corporation (+21.0 sen) and WZ Satu (+11.5 sen) led the broader market higher. Meanwhile, less than half of the key-index players advanced, mainly on Nestle (+30.0 sen), PPB Group (+12.0 sen), Hong Leong Bank (+8.0 sen), Kuala Lumpur Kepong (+8.0 sen) and MISC (+7.0 sen).

• Key regional benchmark markets were beaten down by China’s weaker-thanexpected export data in December last year, highlighting the impact of ongoing trade war. The Nikkei was closed for a public holiday, while both the Shanghai Composite and the Hang Seng Index declined by 0.7% and 1.4% respectively. ASEAN stockmarkets, meanwhile, also ended broadly lower yesterday.

• Pre-earnings jitters and uncertainties in global growth prospects, as well as geopolitical concerns in Europe kept Wall Street lingering in the negative territory on Monday. Consequently, the Dow, the S&P 500 and the Nasdaq all finished lower by 0.4%, 0.5% and 0.9% respectively.

• Earlier, European stockmarkets tracked the general weakness in global equities and closed mostly lower ahead of a key vote on U.K.’s Brexit withdrawal agreement. The FTSE (-0.9%) extended its losing streak into the second-straight day as investors digested disappointing economic data from China. The DAX (- 0.3%) and the CAC (-0.4%) also followed suit, weighed down by lower commodity prices.

The Day Ahead

• Profit taking activities dominated the trend yesterday amid the weak China trade data that showed the effects of the trade war with the U.S. As concerns over the trade war effects continue to dominate sentiments, we see further market weakness ahead.

• We think that profit taking activities could escalate on Malaysian stocks amid the rising economic concerns, albeit we see the downside risk likely to be milder as the selling pressure could ease after yesterday’s pullback. Meanwhile, plantation stocks could be affected by the lower export and prices that could leave its share prices pressured over the near term. On the downside, the support of 1,670 is now in play, followed by the 1,660 level. The resistances are at 1,680 and 1,685 respectively.

• The lower liners and broader market shares are also succumbing to profit taking activities after a purple patch of late and we see this trend persisting due to the weaker market sentiments. At the same time, some of the technical indicators of the lower liners are already overbought, thus heightening the profit taking actions.

Company Brief

• The Employees Provident Fund (EPF) disposed of 4.6 mln shares of IHH Healthcare Bhd on 9th January 2019. Consequently, the retirement fund's stake was reduced to 8.0% or 728.1 mln shares post disposal. (The Star Online)

• Cahya Mata Sarawak Bhd (CMSB) is taking majority stake in associate company, Malaysian Phosphate Additives (Sarawak) Sdn Bhd (MPAS), raising its stake from 49.9% to 60.0% for RM64.2 mln cash. The move was conducted in order to bring MPAS’ earnings into the consolidated statements of CMSB and to bolster the group’s future earnings. MPAS will utilise the proceeds to finance the ongoing construction of an integrated phosphate plant in Samalaju, Sarawak. (The Edge Daily)

• D’Nonce Technology Bhd has redesignated its newly-appointed Executive Director Lim Teck Seng as Group CEO, following the resignation of Kuah Choon Ching on 10th January 2019. Lim had joined the industrial packaging company’s board of directors on 8th January 2019. He also sits on the board of Asia Poly Holdings Bhd, OCR Group Bhd, Pegasus Heights Bhd, Lay Hong Bhd and European Credit Investment Bank Ltd. (The Edge Daily)

• FGV Holdings Bhd has identified RM350.0 mln worth of non-core assets for disposal, as well as several areas for partnerships to capitalise on its strengths and plug capacity gaps. The troubled plantation group could save at least RM150.0 mln in 2019 alone from plugging leaks.

• Several headwinds, however, have been highlighted moving forward, including the resolution of its land lease agreement with Felda and a public sanction from the Roundtable on Sustainable Palm Oil (RSPO). A new management team, including a new Chief Executive Officer will also be announced in the next few days. (The Edge Daily)

• PBA Holdings Bhd’s is seeking a water tariff revision to raise RM501.0 mln to invest in five water supply projects in the State between 2019 and 2021. This takes into consideration that water demand in the State is projected to rise 128.0% to 1,884 mln litres per day from 826 MLD in 2017. (The Edge Daily)

• Ranhill Holdings Bhd’s 26.7%-owned associate, Tawau Green Energy Sdn Bhd (TGE), has failed in its appeal against a revocation of its feed-in approval for the development of Malaysia’s first geothermal power plant with a capacity of 37.0 MW in Tawau, Sabah. Ranhill acquired the stake in TGE for RM18.7 mln back in 29th September 2018. (The Edge Daily)

• Spring Gallery Bhd has appointed its new substantial shareholder, Wan Khalik Wan Muhammad as an Executive Director effective immediately. However, the lossmaking firm has not introduced a new Chief Executive Officer as of yet. The two positions were left vacant by Datuk Lim Chaing Cheah after he resigned on 4th January 2019 to focus on ceramic business at subsidiary level. Khalik had bought a 10.0% stake in the ceramic products manufacturer on 11th January 2019 via private vehicle Total Sejati Sdn Bhd. (The Edge Daily)

• TSR Capital Bhd has secured an RM307.0 mln earthwork sub-contract for the Gemas-Johor Bahru electrified doubletrack project from Syarikat Pembenaan Yeoh Tiong Lay Sdn Bhd. The work scope includes site clearance and embankment earthwork for the project, with work expected to be completed by March 2020. (The Edge Daily)  

Source: Mplus Research - 15 Jan 2019