Trying To Find A Base

• The FBM KLCI ended its six-straight sessions’ of losses and eke- out gains on Wednesday – on mild bargain-hunting activities amongst selected heavyweights. All the lower liners – the FBM Small Cap (+1.2%), FBM Fledgling (+0.9%) and FBM Ace (+0.7%) advanced, alongside majority of the broader market. Only the Financial Services and the Healthcare sectors were in the red yesterday.

• Market breadth also improved with 532 gainers against 328 decliners, while traded volumes rose 22.6% to 3.16 bln shares, driven by mild bargain-hunting in the heavyweights and positive sentiment in the regional stockmarkets.

• Petronas-linked counters like Petronas Dagangan (+28.0 sen), Petronas Gas (+16.0 sen) and Petronas Chemicals (+11.0 sen) topped the big board advancers list followed by Nestle (+30.0 sen) and Press Metal (+12.0 sen). Notable gainers on the broader market include BAT (+RM1.26), Hengyuan Refining (+33.0 sen), Ayer Holdings (+30.0 sen), Teck Guan (+30.0 sen) and KESM Industries (+27.0 sen).

• Panasonic Manufacturing (-14.0 sen) was the biggest decliner on the broader market, while other notable losers include BIMB (-12.0 sen), Apex Healthcare (-11.0 sen), Merge Energy (-10.0 sen) and Ajinomoto (-8.0 sen). Key losers on the FBM KLCI were notable banks like RHB Bank (-17.0 sen), Public Bank (-8.0 sen), CIMB Bank (-7.0 sen) and Hong Leong Financial Group (-4.0 sen), alongside Malaysia Airports (-12.0 sen).

• Japanese equities were splashed in red, although the Nikkei’s losses were cushioned by buying-interest in defenserelated stocks on news that North Korea had restored part of a missile launch site it previously dismantled. On the other hand, the Shanghai Composite (+1.6%) and the Hang Seng index (+0.3%) rallied as investors cheered government tax cuts and expectations of higher infrastructure spending, despite renewed geopolitical concerns, while the majority of the ASEAN stockmarkets closed on an upbeat tone.

• Wall Street extended its weakness as investors retreated to the sidelines to wait for further catalyst from trade negotiations with China. The Nasdaq (- 0.9%) fell for the third-straight session, while the Dow and the S&P 500 finished lower by 0.5% and 0.7% respectively.

• The majority of European key bourses were subdued on Wednesday as banking and automakers took a beating. The DAX (-0.3%) and the CAC (-0.2%) retreated slightly, but the FTSE eked-out gains – led by the rally in tobacco-players and extended weakness in the Pound.

The Day Ahead

• Although the key index managed to stage a mild recovery yesterday, it is not entirely out of the woods as yet. There remain signs of hesitation with yesterday’s rebound just to climbing mildly to break the streak of six consecutive sessions of decline.

• Nevertheless, we think that the key index will continue to find some support after its recent selldown that is seen as mildly overdone. There will be some mild bargain hunting activities to provide the support and this is likely to keep the key index above the 1,685 support level. Meanwhile, the upsides will also stay mild for now amid the lack of new leads to entice fresh buying. Therefore, the key index could find the 1,688-1,690 levels serving as resistances for now. The other support and resistance levels are at 1,680 and 1,696 respectively.

• Elsewhere, the lower liners and broader market shares could continue to tether at the overbought zones, but their prices should hold up over the near term in the absence of substantive selling pressure.

COMPANY BRIEF

• N2N Connect Bhd and its substantial shareholder, SBI Holdings Inc that holds 20.4% shares in the former, are looking to jointly establish and operate a digital asset exchange in the Asia Pacific region. N2N has entered into a Memorandum of Understanding (MoU) with SBI to set out the general understanding of the two parties’ intended engagement in a joint venture.

• The two parties have agreed to form a holding company to cover formation of digital exchanges for all Asia Pacific countries (other than Japan) that will result in both parties holding equal shareholding in each digital exchange. N2N and SBI will contribute their respective expertise and resources towards the success of the joint venture. (The Sun Daily)

• Vertice Bhd has secured a RM100.0 mln sub-contract to supply labour and equipment for the precast viaduct (utrough girder) of the Light Rail Transit Line 3 (LRT3). The two-year construction period ends on 5th March 2021. (The Edge Daily)

• GPA Holdings Bhd has ceased trading and distribution of personal care products under its subsidiary, Kenola Sdn Bhd in order to mitigate the negative impact and losses the segment had on the group. The automotive batteries manufacturer said the business had sustained losses and was anticipated to continue incurring losses, if operations were allowed to continue. (The Edge Daily)

• RHB Bank Bhd saw 189.0 mln shares or a 4.7% stake traded off market on 6th March 2019 for RM592.6 mln at RM5.45 per share, nine sen or 1.6% discount to RHB’s closing price of RM5.54 yesterday. (The Edge Daily)

• Rex Industry Bhd has acquired a piece of land, together with existing industrial buildings in Batu Pahat, Johor for RM13.0 mln in cash, for the purposes of extending its production line. The industrial land comes together with three existing industrial buildings with an annexed two storey office and ancillary buildings with. Rex Canning currently occupying a block on the land which is used as a Distribution Centre. (The Edge Daily)  

Source: Mplus Research - 7 Mar 2019