• The FBM KLCI (+0.6%) resumed trading on an upbeat note as the key index gapped up and hovered in the positive territory for the entire trading session yesterday. The lower liners – the FBM Small Cap (+1.2%), FBM Fledgling (+0.4%) and FBM Ace (+1.0%) all extended their gains, while the broader market closed positively, led by the Energy sector (+2.1%).

• Market breadth remained positive as decliners outshone advancers on a ratio of 443-to-261 stocks. Traded volumes rose 37.8% to 1.43 bln shares as the full trading day resumed.

• Key winners on the local bourse were Tenaga (+48.0 sen), Nestle (+40.0 sen), Petronas Gas (+34.0 sen), KLK (+26.0 sen) and MISC (+26.0 sen). Notable advancers on the broader market include Genting Plantations (+30.0 sen), ShangriLa (+27.0 sen), Aeon Credit (+18.0 sen), Mesiniaga (+18.0 sen) and Rapid Synergy (+15.0 sen).

• On the contrary, Fraser & Neave (-30.0 sen), United Plantations (-24.0 sen), BAT (-22.0 sen) and Heineken (-20.0 sen) fell on the broader market. PLB Engineering slipped 17.0 sen to close at its lowest level since July 2017. Meanwhile, Axiata (-12.0 sen), Malaysia Airport Holdings (- 6.0 sen), Press Metal (-6.0 sen), Ambank (-4.0 sen) and Petronas Chemicals (-2.0 sen) were the biggest decliners on the key index.

• Japanese stockmarkets extended their losses as the Nikkei fell 0.6%, dragged down by concerns over slowing corporate earnings growth as exporters like Panasonic Corp (-3.3%), Toyota Motor Corp (-2.6%) and Suzuki Motor (-3.6%) retreated. Both the Hang Seng Index and Shanghai Composite remain closed for the extended Lunar New Year break. ASEAN equities, meanwhile, closed mostly higher yesterday.

• U.S. stockmarkets extended their losses overnight as the Dow declined 0.9% after a meeting between U.S. President Donald Trump and China’s President Xi Jinping would not take place before the March 2019 deadline on a trade deal. On the broader market, the S&P 500 (-0.9%) was dragged down by the weakness in the energy sector (-2.1%), while the Nasdaq closed 1.2% lower.

• Earlier, European indices – the FTSE (- 1.1%), CAC (-1.8%) and DAX (-2.7%), all extended their losses after the European Union EU slashed its growth outlook for the Eurozone in 2019 to 1.3%, from 1.9% due to global trade tensions. Nevertheless, both the European and U.K. negotiators have agreed for further talks in the coming days in regards to Brexit.

The Day Ahead

• Expectedly, the key index played catch-up to the positivity in overseas bourses during the Lunar New Year break to head past the 1,690 level yesterday. The gains, however, are likely to be short-lived as renewed concerns over the U.S.-China trade talks are set to leave sentiments on Bursa Malaysia on the ebb again.

• At the same time, market participation is likely to remain thin with many players on an extended break for the Chinese New Year that would also mean little fresh buying interest. Therefore, we expect bouts of profit taking activities to send the key index lower to end the week. We think the 1,690 level will give way easily with the next support pegged at the 1,683 points. The resistances are at 1,695 and 1,700 points respectively.

• After heading higher yesterday, we also think that the lower liners and broader market shares could retreat and end the week on a lower note in tandem with the potential pullback of index linked stocks. COMPANY BRIEF

• NCell Pte Ltd and its major shareholder, Axiata Group Bhd have been ordered to pay the capital gains tax bill amounting to 61.0 bln Nepalese Rupees (about RM2.16 bln), excluding late fees and fines, for the Ncell buyout deal. The court verdict officially ends the yearslong controversy over who should foot the tax bill following the sale of Ncell by Sweden-based Telia Sonera to Axiata. (The Edge Daily)

• CCM Duopharma Biotech Bhd has obtained the approval from the National Pharmaceutical Regulatory Authority (NPRA) for its biosimilar erythropoietin (EPO), which adjusts red blood cell generation according to a human body's oxygen requirement.

• It first announced the successful completion of the third phase of the multinational clinical trial for the drug on 15th February 2017, when it highlighted that upon receiving the marketing authorisation from the NPRA for the EPO product (aka PDA10 or ERYSAA), it will be launched in the Malaysian market. (The Edge Daily)

• GFM Services Bhd was awarded two three-year contracts from Bank Negara Malaysia to provide IFM services at selected premises of the bank for a combined value of RM69.0 mln. The contract ends on 31st December 2022. (The Star Online)

• PJBumi Bhd has secured a 36-month project worth RM18.7 mln to refurbish 84 units of residential and commercial buildings as well as infrastructure in Chenor, Pahang, from Salam Properties Sdn Bhd. (The Edge Daily)

• Tropicana Corporation Bhd has dropped its proposed disposal of 251.6 acres of freehold land in Johor Bahru for RM569.9 mln following failure to fulfil conditions in the sales and purchase agreement (SPA) on 1st February 2019.

• Tropicana and the purchaser, Tiarn Oversea Group Sdn Bhd have mutually agreed not to extend the conditions precedent period. (The Edge Daily)  

Source: Mplus Research - 8 Feb 2019