More Gains Ahead

• The FBM KLCI (+0.3%) resumed trading on a firmer footing as the key index hovered in the positive territory throughout the trading session. Consequently, the key index trimmed its weekly losses to close just 0.1% W.o.W lower. The lower liners – the FBM Small Cap (+1.1%), FBM Fledgling (+0.4%) and FBM ACE (+0.8%) all extended their gains, while the REIT (-0.3%) and utilities (-0.1%) sector underperformed the positive broader market.

• Market breadth turned positive as advancers outpaced decliners on a ratio of 487-to-306 stocks. Traded volumes added 4.6% to 1.56 bln shares amid the positive market sentiment.

• Leading the FBM KLCI winners lists were Nestle (+RM1.10), PPB group (+18.0 sen), Press Metal (+14.0 sen), Maxis (+12.0 sen) and Petronas Chemicals (+12.0 sen). Notable gainers on the broader market include Allianz (+36.0 sen), Syarikat Takaful (+20.0 sen) LPI Capital (+18.0 sen), Ajinomoto (+16.0 sen) and G3 Global (+16.0 sen).

• On the flipside, among the biggest decliners on the broader market were consumer products giants like Dutch Lady (-RM1.00), Fraser & Neave (-92.0 sen) and Heineken (-18.0 sen), while SHL Consolidated and Far East Holdings shed 19.0 sen and 17.0 sen respectively. Meanwhile, Petronas Dagangan (-18.0 sen), Petronas Gas (-12.0 sen), Malaysia Airport Holdings (-10.0 sen), RHB bank (-8.0 sen) and Sime Darby (-6.0 sen) slipped on the local bourse.

• Japanese equities rebounded as the Nikkei gained 0.5%, taking cue from the positive sentiment on Wall Street overnight. Both the Shanghai Composite and the Hang Seng Index were closed for the Dragon Boat Festival public holiday. ASEAN stockmarkets, meanwhile, closed mostly higher on last Friday.

• U.S. stockmarkets extended their gains as the Dow (+1.0%) advanced for the fifth straight session as the weaker-thanexpected jobs data re-enforced the view that the U.S. Federal Reserve could potentially move to cut benchmark interest rates. Likewise, the S&P 500 rose 1.2%, boosted by the technology sector (+1.9%), while the Nasdaq finished 1.7% higher.

• Earlier, European benchmark indices – the FTSE (+1.0%), CAC (+1.7%) and DAX (+0.8%), all trended higher after the European Central Bank decided to delay the first post-subprime crisis interest rate hike. In the meantime, British Prime Minister Theresa May officially resigned as leader of the U.K.’s Conservative Party, but maintain her position as Prime Minister.

The Day Ahead

• We see further near-term uptrend as Malaysian stocks continue to play catch up to the gains in overseas indices amid renewed talk of an U.S. interest rate cut that could provide some immediate buying impetus. This optimism will temporarily cast aside the lingering concerns of the U.S.-China trade spat as well as the corresponding effects of the slowing global economic environment.

• As it is, there has been renewed bouts of foreign buying on portfolio re-shuffling of late and this could also provide some calmness to the Malaysian market environment, albeit there remains little change to the fundamentals of corporate Malaysia after the recent results reporting season. Therefore, much of the upcoming gains will largely be on the back of the developments in overseas markets. On the upside, the resistances are at 1,657 and 1,664 levels, while the supports are at 1,644 and 1,639 respectively.

• The lower liners and broader market shares are largely on a rangebound trend and until there is a significant improvement in market participation, we see stocks in the FBM Small Cap, ACE and Fledgling indices to stay at a rangebound trend for longer.

COMPANY BRIEF

• Spritzer Bhd will unveil its new products over the near term to increase its market share in the country to 45.0%, from 40% over the next three-to-five years. The group is planning to introduce functional drinks in the market and 250ml and 300ml-sized mineral water bottles to expand its market share, in addition to a new range of fibre drinks. Meanwhile, export sales which generate about 10.0% of the group’s revenue are also expected to gradually increase with the introduction of the new products.

• On expansion, the group has earmarked about RM25.0 mln over the next two years to expand its PET (polyethylene terephthalate) plant, water-processing capacity and solar power projects to keep up with the group’s enlarged customer base and enhance its competitive edge. The expansion timeline is scheduled to start at end-2019 and should be completed in two years’ time, raising the PET bottle and cap output by 10.0%. (The Star Online)

• Parkson Holdings Bhd's 55.0%-owned Chinese subsidiary has signed a new lease agreement for an existing department store there until end-2021. Parkson Retail Group Ltd (PRGL) had entered into a new lease agreement to rent a 189-sq.m. area at the east side, inside the south gate of Xu Room, located at the Inner Street of Fuxing Men in Beijing, from China National Arts and Crafts Group Co Ltd.

• Rental payable under the new lease agreement will amount to RMB2.5 mln (RM1.5 mln and shall be paid on a quarterly basis. (The Edge Daily)

• CAB Cakaran Corp Bhd‘s Memorandum of Understanding (MoU) with Panasonic Eco Solutions Malaysia Sdn Bhd, in-relation to the establishment of a solar farm in Kedah has been mutually terminated. No reasons for the termination was given.

• To recap, the MoU was signed in June 2017 and lapsed on 6th June 2019 after both parties have mutually agreed not to extend the MoU. (The Edge Daily)  

Source: Mplus Research - 10 Jun 2019