Marking Time

• The FBM KLCI gave in to the prevailing bearish sentiment spilled over from global stockmarkets and finished lower on Wednesday, alongside the broader market. The FBM Ace (+1.4%), however, closed firmly alongside other lower liners - the FBM Small Cap (+0.1%) and the Fledgling (+0.1%) indices.

• Market breadth was still depressed with 395 losers against 305 winners. Traded volumes, however, inched higher by 2.3% to 1.83 bln shares, lifted by rotational play in the lower liners.

• Notable O&G-related counters like Petronas Gas (-10.0 sen) and MISC (-6.0 sen) led the heavyweights index lower, alongside Tenaga Nasional (-22.0 sen), Press Metal (-7.0 sen) and Hong Leong Financial Group (-6.0 sen). Meanwhile, other laggards include Heineken Malaysia (-20.0 sen), Telekom Malaysia (-13.0 sen), Syarikat Takaful Malaysia (-10.0 sen), Time Dotcom (-9.0 sen) and Lingkaran Trans Kota (-8.0 sen).

• On the more positive side, Panasonic Manufacturing (+70.0 sen), Dutch Lady (+50.0 sen), BAT (+44.0 sen), LPI Capital (+18.0 sen) and Genting Plantations (+16.0 sen) were among the broader market losers. Financials-related stocks like CIMB (+4.0 sen), Hong Leong Bank (+4.0 sen) and RHB Bank (+4.0 sen) chalked up minor gains, following lessdovish monetary outlook from the U.S. Federal Reserve. Other Main Board winners were Genting (+4.0 sen) and Digi (+3.0 sen).

• Japanese stockmarkets were splashed in red after the U.S. Federal Reserve Chairperson downplayed expectations of aggressive rate cuts in the near-term. The Nikkei fell for the second straight day, with more than half of its sectors in the negative territory, while the Shanghai Composite traded 0.2% lower. In contrast, the Hang Seng index (+0.1%) eked-out gains following a subdued session, while most of ASEAN stockmarkets retreated.

• Wall Street finished mostly on a downbeat tone as investors closely monitor the developments of the G20 summit in Japan. The Dow fell from its intraday high and closed near its previous close, while the S&P 500 (-0.1%) extended its losses for the fourth consecutive session. The Nasdaq (+0.3%), however, bucked the general downbeat sentiment and closed higher, lifted by Micron, on the back of strongerthan-expected quarterly earnings.

• Major European equities struggled to keep afloat and drifted lower on Wednesday as investors digested fresh corporate news. The FTSE (-0.1%) and the CAC (-0.3%) posted minor losses but the DAX ended with minor gains.

THE DAY AHEAD

• Even with yesterday’s slight retreat, the FBM KLCI remains overbought and we continue to think that the consolidation is to persist. As usual, local institutions have been providing support amid the lack of interest from foreign sources and this could keep the ongoing consolidation on the mild side for longer.

• As it is, market players are awaiting for the outcome of the upcoming meeting between the Presidents of the U.S. and China to see if there is progress in their trade talks. Until then, we think markets will likely be on a holding pattern with few bouts of profit taking activities. There remains support at the 1,670-1,672 levels, followed by the 1,660 level. On the other hand, the resistances are at 1,680 and 1,690 respectively.

• Stocks on the FBM Small Cap, FBM Fledgling and FBM ACE indices looks set to remain on a mostly indifferent mode as market participation remains thin. There remain few noteworthy leads for market players to follow and this will continue to keep most retail players at bay.

MACRO BRIEF

• Malaysia's annual inflation rate in May 2019 remained unchanged at +0.2% Y.o.Y for the third month in a row. Inflation has been mild since the Goods and Services Tax was scrapped in June 2018, while transport costs have declined amid the government’s effort to cap domestic fuel prices. The median forecast for the consumer price index was for a gain of 0.3% Y.o.Y.

• Inflation in May was driven by higher prices for housing and utilities (+1.8% Y.o.Y), food and beverages (+1.2% Y.o.Y), restaurants and hotels (+0.6% Y.o.Y), education (+1.2% Y.o.Y) and furnishings (+0.5% Y.o.Y). (The Edge Daily)

COMPANY BRIEF

• NTPM Holdings Bhd’s 4QFY19 net loss stood at RM4.9 mln vs. a net profit of RM1.2 mln recorded in the previous corresponding quarter, dragged down by higher raw material. Revenue for the quarter, however, grew 10.7% Y.o.Y to RM182.2 mln.

• For FY19, cumulative net profit dipped 69.8% Y.o.Y to RM9.0 mln. Revenue for the year, however, increased 5.3% Y.o.Y to RM728.1 mln. A final dividend of 0.8 sen per share was declared. (The Edge Daily)

• United Malacca Bhd’s 4QFY19 net loss stood at RM13.6 mln against a net profit of RM968,000 recorded in the previous corresponding quarter, weighed down by lower prices of crude palm oil (CPO) and palm kernel (PK). Revenue for the quarter fell 9.5% Y.o.Y to RM56.4 mln. (The Edge Daily)

• Yinson Holdings Bhd’s 1QFY20 fell 17.5% Y.o.Y to RM49.9 mln on lower contribution from the offshore and marine segment that offset the topline gains from other operations, coupled with the higher portion of profit to noncontrolling interests. Revenue for the quarter declined 11.1% Y.o.Y to RM209 mln. (The Edge Daily)

• Fintec Global Bhd has axed its plan to acquire a 75.0% stake in Zouk Club KL for RM29.0 mln. The termination was due to non-fulfilment of conditions precedent. (The Edge Daily)

• Petronas Chemicals Group Bhd (PetChem) has inked a Memorandum of Understanding with Plastic Energy Ltd, a chemical recycling company, to jointly perform a feasibility study to establish a facility to convert plastics waste into tacoil, which is Plastic Energy's optimal feedstock to create recycled virginquality plastics from low quality, mixed plastics waste that are otherwise destined for incineration or landfill. (The Edge Daily)

• Sime Darby Plantation Bhd (SDP) has disposed of its Indonesian subsidiary, PT Mitra Austral Sejahtera (PT MAS) to PT Inti Nusa Sejahtera (PT INS) for US$29.7 mln (RM123.1 mln). PT MAS owns 7,074.04 ha. of oil palm plantation in Kabupaten Sanggau, Kalimantan Barat, Indonesia. (The Edge Daily)

• Scientex Bhd's 3QFY19 net profit rose 19.2% Y.o.Y to RM72.9 mln, on the back of better sales performance achieved by both the manufacturing and property divisions. Revenue for the quarter gained 38.9% Y.o.Y to RM828.5 mln.

• For 3QFY19, cumulative net profit declined marginally by 0.6% Y.o.Y to RM200.3 mln. Revenue for the period, however, climbed 22.7% Y.o.Y to RM2.31 bln. A first interim dividend of 10.0 sen per share, payable on 23rd July 2019, was declared. (The Edge Daily)

• Berjaya Media Bhd (BMedia) has been granted up to 20th December 2019 to submit a plan to regularise its financial conditions by Bursa Malaysia. (The Edge Daily)

Source: Mplus Research - 27 Jun 2019