Poised For A Rebound

• The FBM KLCI (-0.4%) recorded its third day of losses as investors remain cautious on the two-day trade talks between U.S. and China, coupled with uncertainty over the U.S. Federal Reserve policy meeting. The lower liners, however, ended mostly higher as the FBM Small Cap and FBM ACE added 0.1% and 0.3% respectively, while the broader market closed mostly lower.

• Market breadth remained negative as decliners outpaced advancers on a ratio of 424-to-320 stocks, while 372 stocks traded unchanged. Traded volumes slipped 14.0% to 1.92 bln shares as investors stayed defensive amid the renewed market volatility.

• Key losers on the local bourse were Tenaga (-36.0 sen), KLK (-12.0 sen), Petronas Chemicals (-12.0 sen), Maybank (-9.0 sen) and Top Glove (-9.0 sen). Consumer staples products stocks like Dutch Lady (-98.0 sen) and Heineken (- 48.0 sen) slipped, while other notable decliners on the broader market were Genting Plantations (-24.0 sen) and Hong Leong Industries (-21.0 sen). Lotte Chemical Titan sank 38.0 sen after reporting a weak set of quarterly earnings.

• On the flipside, United Plantations (+80.0 sen), Rapid Synergy (+36.0 sen), Pentamaster (+24.0 sen), Batu Kawan (+20.0 sen) and Box-Pak (+15.0 sen) led the broader market gainers list. On the FBM KLCI, Nestle (+30.0 sen), MISC (+12.0 sen), Petronas Dagangan (+12.0 sen), Petronas Gas (+12.0 sen) and Axiata (+8.0 sen) advanced.

• Asian benchmark indices closed mostly lower ahead of the two-day U.S.-China trade talks as the Nikkei slipped 0.5%. The Shanghai Composite declined 0.7% after reversing all its intraday gains, but the Hang Seng Index (+0.4%) advanced. ASEAN stockmarket, meanwhile, closed on a mixed note yesterday.

• Wall Street rallied overnight as the Dow jumped 1.8% to close above the 25,000 psychological level after the U.S. Federal Reserve adopted a dovish stance on future rate hikes. On the broader market, the S&P 500 rose 1.6% with all eleven major sectors in the green, while the Nasdaq surged 2.2%

• Earlier, European indices closed mostly higher as the FTSE and CAC soared 1.6% and 1.0% respectively as mining and energy shares like Rio Tinto (+1.4%), BHP (+2.6%) and Glencore (+2.8%) surged. The DAX, however, fell 0.3% after the Euro currency strengthened against the Greenback.

The Day Ahead

• After failing to mount a recovery yesterday, we think that stocks on Bursa Malaysia may tip higher over the near term in tandem with the positivity in global markets as they cheer the Federal Reserve’s decision to slow its interest rate increases. The Federal Reserve’s move is seen as positive as it prolongs the low funding cost regime that could also help to strengthen economic activities in the U.S.

• Back home, we see the key index making a return to the positive zone on mild bargain hunting activities to break the streak of three consecutive days of consolidation. The gains, however, may still be contained ahead of the Lunar New Year break next week that could leave most market players on the sidelines. On the upside, the hurdles are at 1,690 and 1,694 levels, while the supports are at 1,680 and 1,674 respectively.  Stocks on the FBM Small Cap, FBM Fledgling and FBM ACE are showing some signs of stabilisation which could persist over the near term amid the more positive market undertone. This will lend support to the above listed stocks after an indifferent spell of late, but significant gains are still left wanting due to the thinner following.

COMPANY BRIEF

• APFT Bhd has aborted its lawsuit against its former Executive Chairman, Datuk Faruk Othman for alleged misappropriation of funds noting that the suit has been discontinued with no order as to cost, and with no liberty to file afresh.

• The case was filed against Farouk on 18th July 2018, on the grounds that Farouk had allegedly misappropriated APFT’s funds, causing the company to trigger the Practice Note 17 status and breaching Bursa Malaysia's Main Marketlisting requirements. (The Edge Daily)

• Amanah Harta PNB‘s 4Q2018 net profit fell 70.0% Y.o.Y to RM2.7 mln, from RM9.0 mln in the last corresponding year, mainly due to the recognition of unrealised gain of RM6.2 mln in 2017. Revenue, however, increased 6.6% Y.o.Y to RM8.1 mln, from RM7.6 mln a year ago. (The Edge Daily)

• The Finance Minister has appointed Datuk Shireen Ann Zaharah Muhiudeen to be Bursa Malaysia Bhd's new NonExecutive Chairman, effective 1st March 2019, taking over outgoing Chairman Tan Sri Amirsham A Aziz. The latter will step down on 28th February 2019 after helming the board for nearly four years.

• Datuk Shireen, who has over 30 years of experience in focused fund management of emerging Asia equity markets, will also be made Public Interest Director. (Bernama)

• Chin Hin Group Bhd is partnering with a Singaporean company, Bimage Consulting Pte Ltd to provide consultancy and solutions for construction players in Malaysia. Both parties signed a one-year agreement, which is primarily involved in providing consulting and services in digitizing construction and infrastructure processes.

• CHA will gather market intelligence, provide insights, assist in the preparation of proposals, and introduce prospective customers to Bimage, while the latter will prepare proposals related to business development, sales, technical and pricing matters. (The Edge Daily)

• Ark Resources Holdings Bhd has inked a joint-venture (JV) agreement with Koperasi Kampung Melayu Balik Pulau Bhd (KKMBPB) to develop a piece of land in Balik Pulau, Penang. Ark will develop KKMBPB’s 89.9 ac. of land into a mixeduse development with a minimum gross development value (GDV) of RM600.0 mln. (The Edge Daily)

• Berjaya Corp Bhd has signed an agreement with Penta Master Fund Ltd, PCM Industrial LP and Penta Asia Long/Short Fund Ltd to acquire 4.6% (or 230.0 mln shares) of Berjaya Land Bhd for RM87.4 mln. The acquisition will be satisfied via the issuance of 291.3 mln Berjaya Corp shares at an issue price of 30.0 sen per share. (The Edge Daily)

• Genting Bhd is planning to issue bonds to raise US$775.0 mln to prepay some existing debt facilities and fund general corporate purposes. The guaranteed secured senior notes with a coupon rate of 6.875% per year, payable on a semiannual basis, will be issued by its 57.9%- owned indirect subsidiary, LLPL Capital Pte Ltd.

• The notes will have a tenure of 20 years and be unconditionally and irrevocably guaranteed by PT Lestari Banten Energi (the guarantor), which is a 55.0%-owned indirect subsidiary of Genting. (Bernama)

• Merge Energy Bhd‘s Chief Executive Officer (CEO), Datuk Abdul Jalil Abdul Karim has tendered his resignation to pursue other interests. He has served as the CEO of the group since February 2011. (The Edge Daily)

• Alam Maritim Resources Bhd does not expect a turnaround in FY19 as impairments is to continue throughout the year, while the contracts the offshore vessel group secured last year will only see a full contribution in FY20. The group is in the midst of getting its operations in order and foresees its financial performance this year to continue to be affected by several factors. (The Edge Daily)  

Source: Mplus Research - 31 Jan 2019