Still Dour

• Tracking the bearish sentiments on offshore markets, the FBM KLCI fell 0.4% after lingering in the red last Friday. On a weekly basis, however, the key-index inched higher by 0.2% W.o.W to 1,686.5 points. The lower liners – the FBM Small Cap (+0.5%), FBM Fledgling (+0.8%) and FBM Ace (+0.9%) extended their gains, alongside the majority of the broader market shares

• Market breadth was positive as winners outweigh the losers on a ratio of 407-to- 344 stocks. Traded volumes jumped 74.1% to 2.48 bln shares as investors return from the Lunar New Year holidays.

• Blue-chip constituents like Tenaga Nasional (-22.0 sen), Kuala Lumpur Kepong (-18.0 sen), Axiata (-17.0 sen), Hong Leong Financial Group (-12.0 sen) and MISC (-11.0 sen) led the key-index lower. Meanwhile, notable losers elsewhere were BAT (-80.0 sen), Fraser & Neave (-32.0 sen), Allianz Malaysia (-18.0 sen), Heineken Malaysia (-18.0 sen) and Genting Plantations (-14.0 sen).

• On the opposite side, broader market winners include Time Dotcom (+32.0 sen), QL Resources (+20.0 sen), Sam Engineering (+20.0 sen), Lysaght Galvanised Steel (+17.0 sen) and Lotte Chemical Titan (+13.0 sen). Meanwhile, significant gainers on the key index were Petronas Dagangan (+16.0 sen) and Petronas Gas (+6.0 sen), followed by Public Bank (+6.0 sen), Hap Seng Consolidated (+4.0 sen) and CIMB Bank (+2.0 sen).

• Key regional benchmark indices closed mostly in the red on renewed trade worries and deteriorating earnings outlook. The Nikkei (-2.0%) dropped sharply with all of its sectors in the red, while the Hang Seng Index fell 0.2% to 27, 946.3 points. The Shanghai Composite was closed for the Lunar New Year holidays, while most of the ASEAN stockmarkets slipped into the negative territory on Friday.

• U.S. equities posted minor gains in the eleventh hour as investors shrugged off headwinds including slowing global growth, continued funds outflows from the equity market and trade uncertainties. The Dow (-0.3%) extended its losses for the third consecutive day, although both the S&P 500 and Nasdaq were lifted off their intraday lows and closed 0.1% higher.

• European bourses continued to be downward pressured, ending five-straight weeks of gains on expectations of an economic slowdown in Europe and the depreciating Euro Dollar. Consequently, banking and energy heavyweights weighed on the FTSE (-0.3%), while the CAC and DAX also closed lower by 0.5% and 1.1% respectively.

The Day Ahead

• Renewed concerns over the trade talks between the U.S. and China is raising the specter of higher tariffs on China made goods next month that could again roil stockmarkets and highlighting the precarious state of the trade talks that may even end with no resolution. This is likely to continue tempering the near term global market sentiments and we expect Malaysian stocks to also be similarly affected.

• Hence, we see sustained weakness on the FBM KLCI at the start of week with fresh buying interest remaining thin. At the same time, there are also still few leads for now with market players looking forward to the spate of corporate results to be announced in the remainder of the month to gauge their outlook for 2019. On the downside, the supports are pegged at the 1,680-1,683 levels, while the resistances are at the 1,690 and 1,693 levels.

• The lower liners and broader market shares, however, have generally gained ground of late on rotational plays to decouple from the insipid performance of the index-linked stocks. For now, the positivity looks to continue with more retail players coming back to the market after an extended Lunar New Year break, but we also see increasing choppiness as profit taking activities may escalate.

COMPANY BRIEF

• Utusan Melayu (Malaysia) Bhd’s Executive Chairman, Datuk Abd Aziz Sheikh Fadzir has emerged as the single largest shareholder in the newspaper publisher when he acquired a 31.6% stake on 8th February 2019.

• He acquired the stake, comprising of 35.0 mln shares at 19.0 sen each for a total of RM6.7 mln. This was 7.5 sen or 65.2% higher than the current price of 11.5 sen. He acquired the shares via Opulence Asia Sdn. Bhd from Umno, which was then the largest shareholder with 49.8% or 55.1 mln shares. (The Star Online)

• The Malaysia Competition Commission (MyCC) has warned MyEG Services Bhd for not complying with the decision of the Competition Appeal Tribunal to pay a daily penalty of RM7,500, now totaling RM9.5 mln. MyCC has reported that the egovernment services provider MyEG had continuously been in non-compliance with the CAT’s decision dated 28th December 2018 which affirmed MyCC’s 24th June 2016 decision. MyEG would file an appeal to the Court of Appeal on the decision. (The Star Online)
• AT Systematization Bhd has acquired a 9.1% stake in Trive Property Group Bhd for RM2.9 mln as it seeks to expand into the solar energy business. The group purchased the stake, comprising 213.3 mln placement shares at 13.7 sen per share.

• This comes as Trive announced in a separate filing that it had completed a private placement of 213.3 mln shares. AT Systematization is looking for opportunities to capitalise on its new relationship with Trive, which includes the potential sourcing of solar panels and solar products for periodic maintenance of its existing solar photovoltaic plants, for future expansion and for construction of additional solar photovoltaic plants. (The Edge Daily)

• Berjaya Media Bhd’s unit, Sun Media Corp Sdn Bhd, which publishes theSun newspaper, has lost two defamation suits filed against the company and was ordered to pay damages totalling RM4.6 mln.

• The court ordered Sun Media to pay Asia Pacific Higher Learning Sdn Bhd RM3.0 mln as general damages and RM300,000 as exemplary damages, and to pay Dr Wan Mazlan Mohamed Woojdy RM1.0 mln as general damages and RM300,000 as exemplary damages.

• Sun Media also has to make an unconditional written apology to both plaintiffs and to advertise the apology in a Bahasa Melayu newspaper and an English language newspaper. (The Edge Daily)  

Source: Mplus Research - 11 Feb 2019