Institutional Support To Keep Market Afloat

• The eleventh hour buying support in selected index heavyweights nudged the FBM KLCI into the positive territory as the key index rose 0.3% to record its sixth straight session of gains yesterday. The lower liners, however, extended their losses as the FBM Small Cap (-0.9%), the FBM Fledgling (-0.8%), the FBM ACE (-1.9%) all fell, while the broader market closed on a mixed note.

• Market breadth stayed negative as decliners overpowered advancers on a ratio of 577-to-266 stocks. Traded volumes, however, shrank 28.5% to 1.60 bln shares as the mid-week Hari Raya festive break draw closer.

• Lifting the FBM KLCI were Petronas Gas (+52.0 sen), Nestle (+40.0 sen), Malaysia Airport Holdings (+36.0 sen), Genting (+21.0 sen) and Tenaga (+16.0 sen). Amongst the biggest advancers on the broader market include United Plantations (+70.0 sen), Syarikat Takaful (+19.0 sen), SHL Consolidated (+13.0 sen), Carlsberg (+12.0 sen) and IQ Group (+11.0 sen). London Biscuits added 3.5 sen after reporting a strong set of quarterly earnings.

• In contrast, notable losers on the broader market were Allianz (-32.0 sen), BAT (-30.0 sen), Mesiniaga (-24.0 sen) and Heineken (-22.0 sen). SKP Resources fell 2.0 sen after reporting a weak set of quarterly earnings. Meanwhile, KLK (-20.0 sen), DIGI (-9.0 sen), Public Bank (-6.0 sen), Petronas Dagangan (-6.0 sen) and RHB Bank (-6.0 sen) declined on the local bourse.

• Regionally, Asian benchmark indices remain in the red, spooked by the renewed volatility on Wall Street amid the renewed global trade tension that saw the Nikkei fall 0.9%. The Shanghai Composite (-0.3%) declined, while the Hang Seng Index (-0.03%) ended marginally lower. ASEAN stockmarkets, meanwhile, closed mostly on a mixed note on Monday.

• U.S. stockmarkets finished mixed on a volatile trading session as the Dow managed to climb 0.02% as investors continue to monitor global trade developments. On the broader market, the S&P 500 fell 0.3%, dragged down by the communication services sector (- 2.8%), while the Nasdaq sank 1.6%.

• Earlier, European benchmark indices – the FTSE (+0.3%), CAC (+0.7%) and DAX (+0.6%) all rebounded, boosted by mild bargain hunting activities. In the meantime, Eurozone’s Markit Purchasing Managers Index (PMI) manufacturing figures for May 2019 came in line with economists’ expectation of 47.7.

The Day Ahead

• Once again, late bargain hunting activities on selective index-linked stocks allowed the key index to post gains amid a still dour market environment where equities are seeing insipid following on heightened global trade tiffs that is continuing to dull investor sentiment.

• However, we continue to see local institutions providing selective support on index linked stocks as the selling pressure has dwindled in tandem with the weaker market interest. This makes it easier for the funds to provide the price support on the index heavyweights that we see continuing in the holidayshortened session. On the upside, the key index could still head towards the 1,663 level – its next resistance, but with the technical indicators already toppish, we think that any gains will be mild. The supports, meanwhile, are at 1,650 and 1,642 respectively.  The lower liners and broader market shares looks to continue their consolidation spell as the fresh buying remains thin in view of the lack of catalysts. As it is, most market players are staying on the sidelines after the recent spate of corporate results saw continuing weakness in most corporate earnings performances that is leaving investor confidence on the wayside for longer.

COMPANY BRIEF

• Can-One Bhd has received a conditional offer from Asia Dairy Creations Sdn Bhd (ADCSB) to acquire its 100.0% equity stake of F&B Nutrition Sdn Bhd for up to RM1.0 bln. ADCSB, a special purpose vehicle managed by Singapore-based Southern Capital Group Pte Ltd, is offering to buy F&B Nutrition from CanOne at an indicative consideration of between RM800.0 mln to RM1.0 bln. (The Star Online)

• Petronas Gas Bhd has inked a Heads of Agreement (HoA) with Petronas Chemicals Group Bhd’s subsidiaries in relation to the expansion of industrial gas facility and supply of nitrogen. The project’s commercial operation date is expected to commence in February 2021 and will be funded via its internallygenerated fund. (The Star Online)

• Bintai Kinden Corp Bhd has bagged a RM20.4 mln contract to undertake infrastructure and associated works for the Digital Free Trade Zone (DFTZ) at KL International Airport. The contract is to be completed within 10 months of the commencement date. (The Edge Daily)

• The Securities Commission Malaysia (SC) has approved ECM Libra Financial Group Bhd’s application to sell its entire equity interest in fund management arm Libra Invest Bhd to Kenanga Investment Bank Bhd (Kenanga IB).

• The approval is subject to the condition that the proposed change of shareholder shall not adversely affect the soundness of Libra Invest’s business and the interests of Libra Invest’s clients. (The Edge Daily)

• Dolomite Corp Bhd has signed a share sale agreement with Sunway Bhd for the proposed sale of its entire stake in Dolomite Granite Quarry Sdn Bhd (DGQSB) for RM125.0 mln — a premium of RM2.0 mln or 1.6% to the market value of the lands, plant and machinery.

• Upon completion, RM92.0 mln of the proceeds will be used for payment of redemption sum to Maybank Labuan, while the balance will be used to facilitate the fees involved in the transfer of lands, to settle debts with creditors of DGQSB, payment of income tax and royalty payable, among others. (The Star Online)

• Opcom Holdings Bhd has announced that its ex-Chairman, Tan Sri Mokhzani Mahathir will also be relinquishing all his other positions in the group, following his resignation as the Executive Chairman last Friday. (The Edge Daily)

• Datasonic Group Bhd has clinched a contract worth RM28.8 mln from the Home Affairs Ministry to provide maintenance services of card personalisation centres at the National Registration Department. The contract is for two years commencing 1st June 2019 to 31st May 2021, with an option to extend the contract by another year. (The Edge Daily)

• Kumpulan Perangsang Selangor Bhd (KPS) has secured an Islamic finance credit facility for up to RM150.0 mln from RHB Islamic Bank Bhd to finance up to 48.2% of the group’s acquisition of Toyoplas Manufacturing (Malaysia) Sdn Bhd (TMMSB), from Toyoplas Consolidated Ltd. The group is paying RM311.3 mln for the entire equity interest in TMMSB. (The Edge Daily)

• EA Technique (M) Bhd is proposing to file an application to put aside the payment claim by Malaysia Marine Heavy Engineering Sdn Bhd (MMHE) in relation to a dispute concerning a contract to convert a vessel into a floating storage and offloading (FSO) facility.

• The principal amount has been provided for in the accounts, whereas the interest portion - of approximately RM11.9 mln - shall be included in the accounts once the company receives judgement of the above application. (The Edge Daily)  

Source: Mplus Research - 4 Jun 2019