Minor Gains Seen

• The FBM KLCI (+0.02%) managed to eke-out marginal gains after recovering all its intraday losses, lifted by buying support in selected index heavyweights. The lower liners – the FBM Small Cap (+1.5%), FBM Fledging (+0.5%) and FBM ACE (+1.3%) all advanced, while the broader market finished mostly higher with the energy sector (+2.5%) anchoring the winners.
• Market breadth turned positive as advancers outpaced decliners on a ratio of 501-to-329 stocks, while 421 stocks traded unchanged. Traded volumes rose 42.3% to 3.18 bln shares, boosted by the rotational play amongst the lower liners.
• Maxis (+10.0 sen) led the FBM KLCI winners list, followed by Dialog Group (+9.0 sen), PPB Group (+6.0 sen), MISC (+5.0 sen) and Genting (+4.0 sen). Notable gainers on the broader market were BAT (+48.0 sen), Dutch Lady (+46.0 sen), Manulife (+32.0 sen) and Excel Force (+32.5 sen). MTD ACPI Engineering jumped 3.5 sen after unveiling its plan to buy two construction and property units from privately-held Putrajaya Perdana Bhd.
• In contrast, BLD Plantations (-37.0 sen), KESM Industries (-22.0 sen), Aeon Credit (-12.0 sen), Carlsberg (-10.0 sen) and Fraser & Neave (-10.0 sen) fell on the broader market. Meanwhile, KLK (- 22.0 sen), Petronas Dagangan (-14.0 sen), Public Bank (-12.0 sen), Hong Leong Financial Group (-12.0 sen) and Top Glove (-4.0 sen) sank on the key index.
• Top Asian equity indices were buoyed by the U.S. Federal Reserve dovish stance on its future interest rate direction as the the Nikkei climbed 0.5%. Likewise, the Hang Seng Index rose 0.8%, while the Shanghai Composite added 0.1%. ASEAN stockmarkets, meanwhile, closed mostly on the high on Thursday.
• U.S stockmarkets continue to build on gains from the U.S. Federal Reserve’s dovish stance on interest rate as the Dow (+0.9%) closed at fresh record high, above the 27,000 psychological level Similarly, the S&P 500 (+0.2%) ended a hair away from the 3,000 psychological level, but the Nasdaq fell 0.1%.
• Earlier, European benchmark indices – the FTSE, CAC and DAX all continue to lose ground, falling 0.3% each as gains were capped by the rising Euro currency against the Greenback. Market sentiment was also dampened by the prospect of sluggish corporate earnings in the upcoming results reporting season.

THE DAY AHEAD

• Key index stocks made little headway yesterday, as expected, and even with the Dow heading into new highs, we think that there are still limited near term upsides on FBM KLCI listed stocks at the end of the week.
• To this end, we see limited potential upsides as the valuation of the key index stocks are already toppish, leaving little room left for significant upsides, in our view. At the same time, fresh buying on the index-linked stocks are tepid amid the lack of fresh developments. Therefore, we think that the FBM KLCI is likely to continue drifting with mild positive bias to end the week. On the upside, the resistances remain at the 1,680 and 1,687 levels, while the supports are at 1,672 and 1,660 respectively.
• Meanwhile, the lower liners are on a purple patch amid renewed buying from retail players as they capitalise on the more positive market sentiments to undertake trading activities. This has also extended the FBM Small Cap Index’s overbought streak and as a consequence, a pullback has become more pressing which may materialised ahead of the weekend. As it is, the FBM Small Cap Index has made gains of nearly 11% in the past six-weeks which is already morethan-credible, in our view.

COMPANY BRIEF

• Malakoff Corp Bhd is upping its effective stake in Malaysian Shoaiba Consortium Sdn Bhd — which own shares in power and water plants in Saudi Arabia — by taking over Khazanah Nasional Bhd’s 40.0% equity stake in the consortium.
• Upon completion, the consortium will become Malakoff’s indirect 80.0%-owned subsidiary, while Tenaga Nasional Bhd will hold the remaining 20.0%.
• It has signed a share sale agreement with Khazanah for the acquisition of Khazanah’s entire interest in whollyowned Desaru Investments (Cayman Island) Ltd (DIL) for US$70.0 mln (about RM288.1 mln), which is an immediate earnings-accretive transaction. (The Star Online)
• FGV Holdings Bhd (FGV) has inked an equity transfer agreement with Grand Industrial Holdings Co Ltd to dispose all of its equity interest in FGV China Oils Ltd for RMB165.0 mln (RM100.0 mln) in cash.
• The disposal is in-line FGV’s with its three-year transformation plan to rationalise and divest its non-performing businesses and to focus on maximising returns from performing businesses. (The Edge Daily)
• Boustead Holdings Bhd has terminated its plan to buy multiple pieces of leasehold commercial land totalling 10.7 ac. in Bukit Jalil, Kuala Lumpur for RM172.8 mln. To recap, the original plan was to develop the land into a mixed development with an estimated gross development value of RM333.0 mln.
• No reason was given for the termination of the acquisition from its largest shareholder, Lembaga Tabung Angkatan Tentera which was agreed back in December 2016. (The Edge Daily)
• Magna Prima Bhd is collaborating with PowerChina Construction Group Ltd to bid for an engineering, procurement and construction contract for the third phase of a local project.
• PowerChina will lead the consortium in preparation of the bid proposal for the project and provide the funding required for expenses incurred from the MoU until the award of the contract.
• Magna Prima, meanwhile, will be the local EPC contractor, appointing suitable local subcontractors and suppliers, and providing the necessary technical or commercial documents to support the bidding of the project. (The Edge Daily)
• Mudajaya Group Bhd is planning to raise up to RM16.6 mln via a private placement to repay part of its bank borrowings and fund working capital.
• The placement involves the issuance of up to 62.6 mln shares, representing 10.0% of the group’s total number of issued shares, to third-party investors that have yet to be identified. (The Edge Daily)
• Kejuruteraan Asastera Bhd (KAB) has proposed to transfer a piece of leasehold residential land measuring 6,015 sq. m. in Bukit Raja, Selangor as a form of debt settlement for unpaid subcontract works it completed for a mixed development project in Nilai, Seremban.
• Subsequently, KAB will be paid RM1.5 mln cash in 12 instalments, in addition to the transfer of land worth RM3.5 mln. (The Edge Daily)

Source: Mplus Research - 12 Jul 2019