On A Choppy Trend

• The FBM KLCI ended its winning streak and closed in the red, weighed down by rising global uncertainties and bearish sentiment spilled over from Wall Street overnight. The majority of the lower liners extended their losses, with the exception of the FBM ACE (+0.1%) amid a mostly apathetic broader market.

• Market breadth was still negative as losers beat the winners a ratio of 468-to- 325 stocks, while traded volumes plunged by 37.7% to 2.07 bln, in-tandem with global risk-off sentiment.

• Significant decliners constituted Petronas Dagangan (-40.0 sen), Public Bank (-38.0 sen), Press Metal (-27.0 sen), Genting (-26.0 sen) and Tenaga Nasional (-16.0 sen). Notable laggards on the broader market, meanwhile, includes United Plantations (-30.0 sen), Ajinomoto (-28.0 sen), Batu Kawan (-20.0 sen), Aeon Credit (-18.0 sen) and Pensonic (-17.0 sen).

• On the opposite side, broader market constituents that advanced were BAT (+46.0 sen), Panasonic Manufacturing (+28.0 sen), Mesiniaga (+25.0 sen), APM Automotive (+14.0 sen) and KUB Malaysia (+12.0 sen). Meanwhile, keyindex counters that bucked the broad selldown in Bursa Malaysia were Nestle (+10.0 sen), PPB Group (+8.0 sen), Petronas Gas (+6.0 sen), Hong Leong Financial Group (+4.0 sen) and Maybank (+3.0 sen).

• Key regional stockmarkets see-sawed through a subdued session, but closed mostly unchanged, following jitters arising from slower economic growth and ongoing geopolitical tensions. The Nikkei fell 0.1%, cushioned by gains in communication services (+1.4%) and healthcare (+0.2%) sectors. The Shanghai Composite index (+0.1%) eked out gains, while the Hang Seng Index flatlined. The ASEAN stockmarkets, meanwhile, also finished mostly lower.

• U.S. equities eked-out gains on Wednesday even as sentiments remained depressed due to government shutdown woes and ongoing trade uncertainties. The Dow staged a strong rebound from its intraday low, closing higher after upbeat corporate earnings and outlook from blue-chip counters like IBM and Procter & Gamble. Meanwhile, on the broader market, the S&P500 and the Nasdaq inched higher by 0.2% and 0.1% respectively.

• U.K. equities spiralled lower on Wednesday’s close, following the extended weakness in energy stocks and multinationals. The FTSE fell 0.9% - due to the continued decline in exporters after the Pound rose to its 10-week high. Meanwhile, the DAX (-0.2%) and the CAC (-0.2%) also retreated, on losses in highend retailers amid concerns of weaker Chinese demand for luxury goods moving forward.

The Day Ahead

• After failing to hold on to the 1,700 points level yesterday, the near term outlook remains unchanged with volatility to persist amid the renewed uncertainties over the global economic outlook and the outcome of the U.S.-China trade agreement. As is it, market following has dwindled as there are fewer market positivities to haul stocks prices higher after the decent recovery from the start of the year.

• Notwitstanding the continuing volatility, we think the FBM KLCI should be attempting to cover some of its losses yesterday, taking cue from the gains on Wall Street overnight. However, we think the upsides could be limited as cautiousness is returning that could see the key index making small gains to rechallenge the 1,692 level, before the 1,698 level comes into play. On the downside, there are supports at the 1,680 and 1,670 levels.

• The lower liners and broader market shares are also look tired after their recent gains and we think that their consolidation is likely to sustain for longer. The lack of new leads, coupled with increasing cautiousness, is likely to prompt retail players to lock-in their profits.

COMPANY BRIEF

• KNM Group Bhd has secured a US$6.8 mln (RM28.2 mln) contract to supply large carbon steel pressure vessels to Technip-Samsung Engineering's joint venture company, TTSJV WLL. KNM will supply the vessels over 13 months. (The Star Online)

• Fraser & Neave Holdings Bhd has allocated a capex of RM30.0 mln in 2019 for new production lines as well as the expansion of existing ones. This comes on the back of a 40.0 sen per litre excise tax the Malaysian government is imposing on sugar-sweetened beverages starting 1st April 2019.

• The group will focus on bringing the sugar content for most of its products to below 5.0% without compromising on taste. The investments will also complement F&N's continuous drive to improve efficiency, expand capacity and capability and leverage product innovation. (The Star Online)

• Sunway Bhd and joint venture partner, Hoi Hup Realty Pte Ltd has won a bid to develop an Executive Condominium housing project in Singapore. The project is worth S$434.5mln (RM1.32 bln) and Sunway will have a 35.0% stake in the development with Hoi Hup holding the rest. Sunway’s cost of investment in the joint venture is S$65.0 mln or approximately RM197.8 mln. The completion period of the proposed project shall be 60 months or earlier, commencing from 22nd January 2019. (The Star Online)

• CIMB Group Holdings Bhd is selling its entire 51.0% stake in CIMB Howden Insurance Brokers Sdn Bhd (CHIB) for RM59.6 mln as the banking group seeks to focus on its core operations. CIMB has entered into a share purchase agreement with HBG Asia Holdings Limited and HBG Malaysia Sdn Bhd (Howden) for the disposal. Approval from Bank Negara Malaysia in relation to the proposed divestment was received by Howden on 27th November 2018. (The Star Online)

• Fox Entertainment Group LLC, Twentieth Century Fox Film Corp and FoxNext LLC (Fox) have filed a US$46.4 mln counter claim against Genting Malaysia Bhd’s suit against them for breach of contract at the US District Court, Central District of California. Its counter claim is in respect of annual licence fees, guarantee amounts or royalties and travel reimbursements pursuant to a Memorandum of Agreement (MoA) dated 1st June 2013, as well as consequential damages, reasonable costs and other relief under applicable law. (The Edge Daily)

• Zhulian Corp Bhd’s 4QFY18 net profit surged 37.9% Y.o.Y to RM15.8 mln on lower income tax expense. Revenue for the quarter, however, fell 23.7% Y.o.Y to RM45.0 mln.

• For FY18, cumulative net profit fell marginally by 0.9% Y.o.Y to RM52.4 mln. Revenue for the year declined 10.8% Y.o.Y to RM183.4 mln. The group declared a fourth interim dividend of two sen per share and a special dividend of two sen per share, both payable on 6th March 2019. (The Edge Daily)

• AirAsia Group Bhd is seeking more than RM400.0 mln in counter-claims against Malaysia Airports Holdings Bhd in response to a suit filed by the airport operator last month over outstanding airport taxes. The counter-claims are for losses and damages experienced by AirAsia and its long-haul sister airline, AirAsia X Bhd, due to operational disruptions at klia2. To recap, MAHB had, in December 2018, sued the low-cost carrier and AirAsia X for a combined RM36.1 mln for unpaid airport taxes or passenger service charges (PSC) for international departures. (The Edge Daily)

• Alam Maritim Resources Bhd has secured work orders worth some RM24.6 mln from Petronas Carigali Sdn Bhd for the provision of three platform supply vessels. Of the three jobs, started on 21st September 2018, is a firm charter duration of up to 124 days, whereas the other two for a longer period of 181 days beginning two months later. (The Edge Daily)

• Hua Yang Bhd’s 3QFY19 net profit stood at RM5.8 mln vs. a net loss of RM0.8 mln recorded in the previous corresponding quarter, owing to better pricing and marketing strategy. Revenue for the quarter improved 37.1% Y.o.Y to RM68.4 mln.

• For 9MFY19, cumulative net profit spiked 390.4% Y.o.Y to RM8.7 mln. Revenue for the quarter rose 41.2% Y.o.Y to RM199.5 mln. (The Edge Daily)  

Source: Mplus Research - 24 Jan 2019