Going Nowhere

• Malaysia’s main bourse inched marginally higher, despite weighted down by the extended selling-pressure in banking heavyweights and the regional weakness. The majority of the lower liners like the FBM Fledgling (-0.1%) and FBM Ace (- 1.2%) retreated, with the exception of the FBM Small Cap. The broader market, however, shrugged off the general negative sentiment and closed mostly higher.

• Market breadth turned bearish as losers outweighed winners on a ratio of 459-to- 428 stocks, while traded volumes eased 3.4% to 3.06 bln shares due to risk-off sentiment as investors wait for the outcome of the U.S.-China trade negotiations.

• Top Main Board performers were Nestle (+80.0 sen), IHH Healthcare (+6.0 sen), Petronas Chemicals (+6.0 sen), Axiata (+3.0 sen) and Hartalega after the giant glovemaker snapped two-straight sessions of losses and closed 3.0 sen higher. Notable broader market winners, meanwhile, were Tasek (+47.0 sen), Carlsberg (+40.0 sen), Lafarge Malaysia (+35.0 sen), Scientex (+20.0 sen) and Malaysian Pacific Industries (+17.0 sen).

• In contrast, plantations-linked counters like Batu Kawan (-42.0 sen) and Sarawak Oil Palms (-13.0 sen) and Oriental Holdings (-12.0 sen) weighed on the broader market, alongside BAT (-24.0 sen) and KESM Industries (-13.0 sen). Less than half of the key-index members declined - including Petronas Dagangan (- 18.0 sen), Malaysia Airports (-8.0 sen), CIMB Bank (-7.0 sen), RHB Bank (-6.0 sen) and Genting (-3.0 sen).

• Key regional stockmarkets closed mostly lower – led by the Nikkei (-0.7%) on the back of losses in semiconductor-related stocks after the U.S. automotive chipmaker Renesas announced plans to partially halt production in Japan due to potentially lower Chinese demand. The Hang Seng index (-0.9%) also weakened, although the Shanghai Composite inched higher even as trade tensions rose amid Huawei’s legal pursuit against the U.S. ASEAN stockmarkets, meanwhile, finished mostly in the negative territory at Thursday’s close.

• U.S. equities also took a beating, taking cue from the negative sentiment in its European counterparts. Tech-laden indices like Nasdaq (-1.1%) and the S&P 500 (-0.8%) extended their losses, while the Dow lost 0.8% - hit by weakness in banking heavyweights.

• Earlier, European equities retreated on renewed fears of slower Eurozone growth after the ECB made a major policy reversal by delaying interest rate hike and introducing fresh rounds of stimulus to shore up the economy. European bluechips - the FTSE (-0.5%), the DAX (-0.6%) and the CAC (-0.4%) all remained downward pressured, weighed down by financials-related counters.

The Day Ahead

• There appears to be little impetus for stocks to head higher as sentiments remain are still indifferent with also few noteworthy leads for market players to follow. This is compounding the already dour trend that led to the key index’s pullback from the recent high of 1,730 level.

• With the near term outlook remaining indifferent, we see the mostly sideway trend persisting for now. As it is, there remains little fresh buying, whilst the selling pressure is also low, albeit there could still be mild profit taking activities. With the sideway trend persisting, we see the key index lingering within a tight range of between the 1,682 and 1,690 levels over the near term. The other support and resistance levels are at 1,680 and 1,698 respectively.

• We also think that the lower liners and broader market shares will retain a mostly sideway trend. There remains support on some of the above stocks and this will be key to ensuring that the FBM Small Cap, Fledgling and ACE Market stocks retain their gains from the recovery that started in mid-December.

COMPANY BRIEF

• KNM Group Bhd won a US$49 mln contract to supply carbon steel pressure vessels from TTSJV WLL for the BMP Modernisation Programme-Bahrain. That the supply and delivery duration would be for 12 months. (The Star Online)

• SP Setia Bhd’s 50% joint venture company, Retro Highland Sdn Bhd is planning a RM16.30 bln mixed development in Cheras. The project will be located on a 77.8 ac. of leasehold land awarded to the company in exchange for developing quality sustainable people housing (QSPH) for Kuala Lumpur City Hall (DBKL).

• Retro Highland, which is jointly controlled by S P Setia and Tradewind Corp Bhd, first signed the privatisation agreement with DBKL on 7th May 2018. The overall QSPH development will be undertaken by Retro Highland in four phases comprising the construction and completion of 5,650 units of 3 bedrooms units measuring approximately 850 sq.ft. each with amenities on approximately 60.5 ac. of land for DBKL and agreed owners, as well as 112 shops/stalls and a market. (The Star Online)  Lafarge Malaysia Bhd, which saw its shares surge by as much as 30.0% to hit limit up on 7th March 2019, said it has no idea what might have caused the sudden jump in its share price in its reply to Bursa Malaysia’s unusual market activity query. Lafarge’s shares climbed by as much as 60 sen to RM2.60 when it hit limit up. (The Edge Daily)

• Handal Resources Bhd has proposed to raise up to RM5.0 mln via a private placement to third-party investors to be identified later. The proceeds raised will be used to fund new projects, which may include the purchase of additional equipment to enable Handal to carry out the increased volume of maintenance and services works and/or purchase of offshore cranes to expand its fleet of rental cranes, as well as for working capital. The proposed private placement will involve the issuance of up to 16.0 mln new shares, representing not more than 10.0% of its issued shares. (The Edge Daily)

• Pelangi Publishing Group Bhd and Sasbadi Holdings Bhd have separately announced that they bagged textbook contracts from the Ministry of Education (MoE). Pelangi received a letter of acceptance from the MoE to publish, print and supply Mathematics textbooks for Year 4 of the national-type Chinese primary Schools (SJKCs). The contract is worth RM1.1 mln and valid for three years.

• Sasbadi has also secured a 3-year contract to supply Arts education textbooks for Year 4 of the SJKCs from the MoE, worth RM0.7 mln. The contract will start from 5th March 2019 and end on 4th March 2022. (The Edge Daily)

• Jiankun International Bhd has been served a summons for RM377,982 over its failure to pay the balance sum, pursuant to a settlement agreement in September 2018. Jiankun has reported that the group has adequate resources to meet the commitment of the claim and therefore the lawsuit is not expected to have any material financial and operational impact on the group. (The Edge Daily)

• Maxis Bhd, in collaboration with Huawei, kicked off the first 5G live trials in Malaysia, specifically in Cyberjaya earlier this week. The trials will be conducted over six months and are expected to provide a deeper analysis of 5G characteristics.

• This includes the use of spectrum in higher bands, co-existence with current services as well as use cases such as Gigabit high speed mobile internet and ultra-high-definition virtual reality applications. Once available, 5G is expected to provide speeds up to ten times higher than what 4G network can do today for applications such as Ultra High-Definition VR and 360 degree viewing. It will also open up new use cases in areas such as artificial intelligence, robotics and drones. (The Edge Daily)  

Source: Mplus Research - 8 Mar 2019