Still Nowhere To GO

• The FBM KLCI closed marginally in the red, albeit supported by strong gains in Tenaga Nasional. All the lower liners followed suit, led by the FBM ACE (- 0.9%), the FBM Small Cap (-0.8%) and the FBM Fledgling (-0.5%) indices, while the majority of the broader market shares retreated. The only gainers were the REITs and the Utilities sub-sectors.

• Market breadth was insipid with 537 losers vs. 255 gainers, while traded volumes narrowed further by 7.3% to 1.62 bln shares due to the lack of trading catalysts.

• Significant decliners were Petronas Dagangan (-30.0 sen), Malaysia Airports (-19.0 sen), Hong Leong Financial Group (-16.0 sen), MISC (-14.0 sen) and Maxis (-11.0 sen). Other decliners were Fraser & Neave (-58.0 sen), BAT (-38.0 sen), Hume Industries (-22.0 sen), Apex Healthcare (-20.0 sen) and Ajinomoto (-20.0 sen).

• On the opposite side, Carlsberg (+52.0 sen), Manulife (+10.0 sen), Greatech Technology (+9.0 sen), Sarawak Consolidated (+9.0 sen) and Bermaz Auto (+8.0 sen) were among the leading advancers on the broader market. Meanwhile, strong gains in Tenaga Nasional (+56.0 sen) propped up the Main Board, alongside Nestle (+80.0 sen), Genting (+4.0 sen) Genting Malaysia (+3.0 sen) and IOI Corporation (+1.0 sen).

• Asian equities finished mostly higher ahead of the scheduled meetings of several key Federal banks. The Nikkei was rangebound, ending flat on Monday, while the Hang Seng index snapped a three-day losing streak despite rising public pressure for Hong Kong Chief Executive Carrie Lam’s resignation following the mass protest over HongKong’s extradition bill. The Shanghai Composite also ended in the positive territory, although the majority of the ASEAN stockmarkets ended in the red.

• Wall Street eked-out gains on expectations of lower interest rates, buoyed by weak Chinese economic data and slowing global economic growth as the trade tensions continued to flare. The Dow gave up most of its earlier session gains, albeit still closing marginally higher, alongside the S&P500 (+0.6%). The Nasdaq (+0.6%) also improved, boosted by bargain-hunting in tech stocks.

• Most European stockmarkets closed higher on Monday’s close, although capped by the weakness in airlinesrelated stocks. The FTSE and the CAC closed higher by 0.2% and 0.4% respectively. In contrast, the DAX declined, weighed down by German airline Lufthansa’s latest profit warning, sparking a sector revaluation.

THE DAY AHEAD

• Trading on Bursa Malaysia appears directionless as market players await for new leads to re-enter the market. As it is, market interest continues to thin with most participants remaining on the sidelines that have seen traded volumes dwindling below the 2.0 bln shares a day mark of late, an indication of the increasingly insipid market conditions.

• While the lack of market activities is allowing for the key index stocks to find support, the lack of follow through buying will continue to leave FBM KLCI listed stocks on the wayside as there are also little prevailing selling pressure. Hence, we see the broadly sideway trend remaining for longer with the FBM KLCI likely to trend within the 1,635 and 1640 levels for now. The other support is at the 1,630 level, while there is further resistance at the 1,650 level.

• The lower liners and broader market shares are set for further consolidation on the back of the lack of leads that is also contributing to the thinning market participation. There continues to be few follow through buying activities due to the still cautious market undertone and this is likely to see further profit taking activities over the near term, in our opinion.

COMPANY BRIEF

• Damansara Realty Bhd and the Negeri Sembilan government will jointly undertake a mixed development property project in Bandar Sri Sendayan, Seremban with a gross development value of RM771.0 mln. The mixed development project comprises of commercial podiums, shop lots and residential units. The development profit payable to the state government is approximately RM100.8 mln over eight tranches. (The Star Online)

• Astro Malaysia Holdings Bhd has inked a strategic partnership with China-based online entertainment service provider, iQIYI. With the agreement, Astro has the exclusive rights to deliver iQIYI content on TV, On Demand and OTT in Malaysia, including the world's first iQIYI branded channel comprising iQIYI's extensive slate of original content, from drama to variety shows and movies. Astro will also take the lead in customer acquisition, marketing and media sales. (The Edge Daily)

• The Attorney-General's Chambers (AGC) has opposed the leave application by AirAsia Group Bhd to commence a judicial review against Malaysian Aviation Commission (Mavcom) for refusing to mediate an ongoing dispute between the budget airline and Malaysia Airports Holdings Bhd (MAHB).

• The AGC intervened in the leave application on grounds that the judicial review could not be conducted because Mavcom has not decided on the MAHBAirAsia dispute, but has merely deferred the decision. (The Edge Daily)

• Star Media Group Bhd's news website, The Star Online has partnered Indiabased marketing technology company Netcore Solutions to help it embrace artificial intelligence (AI) marketing by delivering personalised brand campaigns to improve user experience. (The Edge Daily)

• Sarawak Energy Bhd is eyeing the potential sale of additional electricity to Indonesia, following recent reports that the Indonesian capital might be shifted to West Kalimantan, from Jakarta. Sarawak Energy is currently progressing on the Borneo Grid initiative with the first interconnection to West Kalimantan already established. (The Edge Daily)

• Seacera Group Bhd’s new board of directors has put the tile maker’s banking transactions and legal proceedings on hold, after the first board meeting. The resolution for removal and appointment has been carried out and 88.0% of shareholders voted for seven new directors who now sit on the Board. They are Shirley Tan Lee Chin, Rizvi Abdul Halim, Datin Ida Suzaini Abdullah, Clarence Yeow, Chua Eng Chin, Marzuki Hussain and Ong Eng Taik.

• Lee Chin, the sister of Seacera’s single largest shareholder, Datuk William Tan Wei Lian ,has been authorised by the board to point an auditor to conduct detailed forensic investigation into the group's financial records and accounts. (The Edge Daily)

• ARB Bhd has teamed up with a Cambodian firm to implement the enterprise resource planning (ERP) system and solutions in that country. ARB signed an MoU with East Insurance PLC for the project, valued at no less than US$20.0 mln (RM83.5 mln). (The Edge Daily)

• Pestech International Bhd has secured a US$7.2 mln (RM29.9 mln) contract to supply mobile substations to Iraq’s electricity ministry. The contract marks a significant milestone for the group as this is the first time it is venturing into the Middle East region. (The Edge Daily)

Source: Mplus Research - 18 Jun 2019