Downtrend Still Intact

• The FBM KLCI retreated after trading mostly in the red, in-tandem with the weakness in regional peers ahead of key U.S. economic data. The FBM Small Cap flatlined, while the majority of the lower liners finished higher. The broader market also rallied, helmed by the Energy (+1.6%) and the Technology (+0.8%) sectors.

• Still, market breadth was negative as 450 decliners trounced 407 winners, while traded volumes increased by 10.4% to 3.32 bln, lifted by extended buying-support in selected O&G stocks.

• On the losing end, blue-chips like Kuala Lumpur Kepong (-16.0 sen), Petronas Chemicals(-12.0 sen), Petronas Gas (- 10.0 sen), Tenaga Nasional (-10.0 sen) and Hong Leong Financial Group (-8.0 sen) took the beating, while other notable decliners include Panasonic Manufacturing (-20.0 sen), Magni-Tech (-14.0 sen), Vitrox (-14.0 sen), United Plantations (-10.0 sen) and Cycle & Carriage Bintang (-8.0 sen).

• On the flipside, Dutch Lady (+40.0 sen), Lafarge Malaysia (+21.0 sen), Carlsberg (+16.0 sen) and BAT (+14.0 sen) advanced. LPI Capital (+12.0 sen) also rallied after posting upbeat quarterly earnings. Key-index outperformers, meanwhile. were Dialog (+8.0 sen), IHH Healthcare (+6.0 sen), Press Metal (+6.0 sen), Ambank (+3.0 sen) and MISC (+3.0 sen).

• Key benchmark regional indices closed mostly lower as investors await key economic reports from the U.S. The Nikkei (-0.2%) ended lower even as Japanese automakers rallied, driven by expectations of increased sales following hopes of less stringent emission regulations for hybrid vehicles in China. The Shanghai Composite also declined on concerns of slowing economic growth, although the Hang Seng index beat its peers and climbed 0.2%, while the majority of ASEAN stocks closed in the red.

• Wall Street snapped its winning streak after a volatile session on renewed fears of exacerbating U.S.-China trade tensions. The Dow slid 0.1%, albeit losses were supported by gains in lenders like Goldman Sachs (+1.9%). On the broader market, the S&P 500 and the Nasdaq also closed 0.3% and 0.4% lower respectively.

• Key European bourses closed positively on Tuesday, backed by gains in banking heavyweights, taking cue from the betterthan-expected quarterly earnings of their U.S. peers. The FTSE (+0.6%) continued on its upward trajectory, supported by a stronger Pound despite the Brexit uncertainties, while gains in luxury retailers pushed the CAC (+0.7%) higher. The DAX also rose 0.4% to 12,431 points.

THE DAY AHEAD

• Despite its string of consecutive of losses, there are still no signs of a recovery on the FBM KLCI as yet and the downside bias is likely to continue over the near term. As it is, the key index is still consolidating after its strong gains over the May-June period that has also left it overbought.

• Meanwhile, there are still few fresh leads, both domestically and overseas, to spur fresh buying and this could again leave the key index to drift lower. In addition, there are renewed concerns over the direction of global equities after they soared over 16% YTD and have left valuations on the toppish side.

• With the consolidation likely to continue over the near term, the FBM KLCI’ ssupports are pegged at the 1,665 level, followed by the 1,660 level. The resistances, on the other hand, are at 1,676 and 1,680 levels.

• The FBM Small Cap remains overbought despite yesterday’s mild pullback and we continue to think that a steeper pullback is overdue even as it attempts to break out of its year-high level yesterday. Hence, we think that further near term gains will be more difficult to come by amid the already toppish technical indicators.

COMPANY BRIEF

• Brahim Holdings Bhd’s marketing and distribution arm, Dewina Holdings Sdn Bhd is aiming a 10.0% increase in sales of its meals-ready-to-eat packs during the first year of its venture into e-commerce. The company aims to achieve the 100,000 meal packs selling target.

• The company started joining the online platform in March 2019 and todate, the response has been overwhelming with about 35,000 meal packs dispatched during the four-month period, averaging 300 to 500 meal packs per day. More than 50 Brahim’s products ranging from meals-ready-to-eat such as rice, porridge and variety of dishes to ready-to-cook sauces and pastes are offered in the online stores. (Bernama)

• Vortex Consolidated Bhd has secured approval from the Labuan Financial Services Authority (LFSA) to carry out offshore money-broking business. The company also said the approval also carries with it the usual conditions imposed on licence holders. (The Edge Daily)

• Opcom Holdings Bhd has appointed former chairman of Malaysian Communications and Multimedia Commission, Datuk Mohamed Sharil Tarmizi as its Independent and NonExecutive Chairman, replacing Tan Sri Mokhzani Mahathir who resigned as Executive Chairman on 1st June 2019. (The Edge Daily)

• MNC Wireless Bhd has inked a Memorandum of Understanding with Urban Setup Sdn Bhd to provide a transparent, secured and convenient mobile physical gold retail platform in Malaysia. Urban is the licensee of the physical gold retail platform of SGPMX (M) Sdn Bhd. The gold e-commerce retail platform, slated to be launched by end- 2019, will allow consumers to buy physical gold via the mobile application with a minimum fraction value of 1.0 sen. (The Edge Daily)

• JF Technology Bhd (JF Tech) said that the U.S. Court of Appeals for the Federal Circuit has dismissed the appeal by its unit, JF Microtechnology Sdn Bhd in relation to a patent infringement complaint filed by Johnstech International Corp, officially marking the end of the five-year case.

• The appeal court had upheld the District Court's decision on 19th June 2019, in which it ordered the award of US$1.5 mln in damages to Johnstech and refused the motion for attorney's fees to be paid to Johnstech. (The Edge Daily)

Source: Mplus Research - 17 Jul 2019