Still Up In The Air

• The local blue-chip bourse declined for the fifth straight session, weighed down by selling pressure in selected heavyweights on disappointing corporate earnings from most of the main index constituents. The lower liners, however, shrugged off the negative sentiment and climbed higher with the FBM Small Cap (+0.8%) at the forefront. The broader market, meanwhile, ended mostly lower on Monday.

• Market breadth was negative as losers overturned the winners marginally on a ratio of 448-to-426 stocks. Traded volumes, however, added 8.0% to 3.14 bln shares amid renewed foreign outflows.

• Leading the Main Board lower were Nestle (-60.0 sen), Petronas Dagangan (- 50.0 sen), Tenaga Nasional (-12.0 sen), Genting (-11.0 sen) and PPB (-10.0 sen). Broader market laggards, meanwhile, include sin-stocks like BAT (-60.0 sen), Carlsberg (-48.0 sen) and Heineken Malaysia (-20.0 sen), followed by Fraser & Neave (-26.0 sen) and Rapid Synergy (- 17.0 sen).

• Meanwhile, broader market winners were Time Dotcom (+34.0 sen), Petra Energy (+23.5 sen), Apex Healthcare (+21.0 sen), Dayang (+18.0 sen) and Westports (+16.0 sen). Top performing blue chips include banking stocks like RHB Bank (+6.0 sen) and Hong Leong Financial Group (+4.0 sen), followed by Press Metal (+8.0 sen), Dialog (+2.0 sen) and Digi (+2.0 sen).

• Chinese stocks were mostly higher ahead of China’s annual legislative session. The Shanghai Composite jumped 1.1% on expectations of more government stimulus to buoy the slowing economy. The Nikkei and the Hang Seng index also grew 1.0% and 0.5% respectively, alongside the majority of the ASEAN stockmarkets.  Wall Street slipped into the negative territory on weak construction spending in December, igniting concerns of a slower-than-expected 4Q2018 economic growth. The Dow (-0.8%), the S&P 500 (- 0.4%) and the Nasdaq (-0.2%) experienced a short-lived boost before giving back all of the gains by the end of the session.

• Major European indexes rallied on Monday as investors digested the latest U.S.-Sino trade deal developments and easing Brexit tensions. Both the FTSE and the CAC added 0.4%, but the DAX (- 0.8%) erased earlier gains on the back of sharp selling-pressure in the eleventh hour.

The Day Ahead

• There was no reprieve for stocks on Bursa Malaysia as they continued to head south to once again buck the region’s positivity amid a string of weak corporate results reported last month. With sentiments remaining subdued and key overseas bourses also taking a breather, we think the downside bias is set to stay for longer.

• As it is, market conditions remain mixed with interest on index linked stocks staying tepid, while rotational plays are still prevalent among the lower liners and broader market shares. We see this trend continuing as the indifferent earnings outlook for index linked stocks will continue to weigh on their near term performance. This means that the support at 1,690 level is still in play and if it is breached, the next support is pegged at 1,682. The resistances, meanwhile, are at the 1,698-1,700 levels.

• The lower liners and broader market shares could still see rotational plays, albeit the FBM Small Cap, Fledgling and FBM ACE indices remain overbought. Consequently, we think that the upsides may be limited amid the return of quick profit taking activities.

COMPANY BRIEF

• Top Glove Corporation Bhd, which issued US$200.0 mln (about RM814.1 mln) in exchangeable bonds, expects to save RM16.0 mln in interest per year. The bonds were priced at 2.0% per annum coupon for a fixed five-year period, compared to 4.0% per annum of the previous loans. The net proceeds from the bonds will be used mainly to refinance its existing debt.

• To recap, Top Glove had successfully priced the bonds on 20th February 2019 and they were completed on 1st March 2019. The bonds were listed on Bursa Malaysia and Singapore Exchange on 4th March 2019.

• Bondholders have the right to exchange their bonds into new shares of the company at any time during the exchange period, at an initial exchange price of RM6.204 per share, which is a 20.0% premium to the closing share price of the company on 20th February 2019 of RM5.17. (The Star Online)

• JAG Capital Holdings Sdn Bhd has emerged the largest shareholder in KUB Malaysia Bhd after the former acquired a 32.0% stake worth RM121.1 mln in KUB from Anchorscape Sdn Bhd. The direct transaction between JAG Capital and Anchorscape was completed on 1st March 2019.

• A total of 178.1 mln shares were exchanged at 68 sen each, a significant premium from the closing price on 1st March 2019 of 39.5 sen. Anchorscape Sdn Bhd is an investment holding company linked to Darhim Dali Hashim and Datuk Abdul Rahman Mohd Redza. Prior to the transaction, Anchorscape was the largest shareholder in KUB with a 52.2% stake in the company. (The Edge Daily)

• Dagang NeXchange Bhd (DNeX)'s 30.0%- owned associate, Ping Petroleum Ltd has signed a rig contract with Stena Spey Services Ltd to drill two wells in the North Seain 2019. The first well is the Guillemot A GUA-P1 side-track at the Anasuria Cluster concession, which can unlock about 1.7 mln barrels of oil from its current net proved and probable (2P) oil reserves.

• Drilling of the side-track is scheduled to start by 1H2019 with production expected upon completion of the project. The second well, meanwhile, is a development well in Avalon field and will be executed by Ping Petroleum UK Ltd (PPUK) as the operator of the field. (The Edge Daily)  

Source: Mplus Research - 5 Mar 2019