No Reprieve Yet

• The Main Market dropped further amid negative sentiments on offshore markets as the U.S threatens to impose more tariffs on Chinese imports. The rest of the market were also affected as the FBM Small Cap (-0.6%), FBM Fledging (-0.42) and FBM ACE (-0.7%) closed negatively, while all broader market stocks closed in the red as well.

• The market breadth was overwhelmingly negative with 618 losers stocks in contrast to only 226 winners. Traded volumes climbed 15.1% to 3.83 bln, with selling pressures evident across the various board.

• Most blue-chip stocks closed negatively today, with significant underperformers being Petronas Chemicals (-32.0 sen), Malaysia Airports (-22.0 sen), Tenaga Nasional (-22.0 sen), PPB (-16.0 sen), and Petronas Gas (-14.0 sen). Other notable decliners on the Main Market also include British American Tobacco (- 64.0 sen), Malaysian Pacific Industries (-23.0 sen), Ajinomoto (-14.0 sen), KESM Industries (-14.0 sen) and Kawan Food (-11.0 sen).

• On the contrary, stocks that closed positively were New Hoong Fatt (+26.0 sen), Y&G Corporation (+24.5 sen), Batu Kawan (+18.0 sen), Guan Chong (+18.0 sen) and Heineken (+18.0 sen) Meanwhile on the key index, IOI Corporation was the only winner, closing 2.0 sen above its previous session.

• Key benchmark regional indices dipped further into the red following jitters over earnings contraction in corporate America that was compounded by negative remarks from the U.S on the trade war with China. Japan’s Nikkei closed 0.3% lower as the Shanghai Composite declined further by 0.2%, while the Hang Seng index also dipped 0.1%. ASEAN indices also traced the negative mood in the U.S with the majority of stocks closing in the red.

• U.S. stock indexes fell on Wednesday with growing concerns that the protracted trade war between the United States and China could hurt corporate earnings. The Dow Jones Industrial Average fell 0.4%, while the S&P 500 dipped 0.7% as the Nasdaq Composite slid 0.5%.

• In Europe, key indices reversed their three day winning streak as a result of poor quarterly results and oil majors across the region reacting to this week’s slump in oil prices. The FTSE slid 0.6% into the red as the DAX dropped by 0.7% while the CAC closed 0.8% lower.

THE DAY AHEAD

• There remains little following on the index-linked stocks as they continue to mirror the performance of global indices and with cautiousness over the U.S-China trade dispute re-emerging, sentiments are turning increasingly wary.

• Under the prevailing environment, the FBM KLCI’s consolidation trend is likely to continue as there are still few signs of a recovery as yet. As it is, the key index is still undergoing an adjustment from its overbought spell after it gained more than 7.0% in a span of six weeks. The recent consolidation, however, has allowed its valuation to retreat back into its historical forward ranges of 14x-17x.

• Meanwhile, the ongoing consolidation could tip the FBM KLCI back to the psychological support of 1,650 level, but if it gives way, the key index could retrace back to the 1,643 level. The resistances, on the other hand, are at 1,660 and 1,670 respectively.

• The FBM Small Cap index is also retreating from its bout of overbought and the consolidation looks set to continue as the toppish conditions remains. Elsewhere, the other lower liners and broader market shares also look to remain choppy as profit taking activities are likely to escalate.

COMPANY BRIEF

• Petronas Gas Bhd said that a fire at one of its gas processing plants in Paka, Terengganu, was fully extinguished. The fire,was confined to one of the plant's equipment and was put out.

• It added that the incident had no major impact to its overall operations with its other gas processing facilities ensuring uninterrupted gas supply to its customers. (The Star Online)

• Hibiscus Petroleum Bhd indirect wholly owned unit, Anasuria Hibiscus UK Ltd (AHUK) has agreed to acquire new blocks in the North Sea for US$5.0 mln. The blocks includes the Crown Discovery, which consists of contingent resources of 8.0 mln barrels of oil and 6.00 bln cubic feet of gas. (The Star Online)

• Mulpha International Bhd is selling a 4- star hotel in Cairns, Australia for A$65.0 mln (RM187.9 mln). The 242-room Rydges Esplanade Resort will be sold to JY Cairns Esplanade Hotel Pty Ltd. The sale is expected to result in a net gain after tax of A$14.9 mln. (The Star Online)

• Freight Management Holdings Bhd is currently exploring plans to dispose of its 49.0% interest in Singapore-based TCH Marine Pte Ltd and a pair of tug and barge under a 50:50 joint venture with Scomi Energy Services Bhd. However, it clarified that the terms and conditions have yet to be fixed.

• The disposal is in line with the objective of exiting loss-making marine-related businesses and focus on core freightrelated activities. (The Edge Daily)

• Pharmaniaga Bhd has appointed Datuk Dr Hafsah Hashim, the former Chief Executive of SME Corp Malaysia, as its Non-Executive Chairman. Pharmaniaga also announced the appointment of several new directors to the board. They include former Health Ministry Director General Tan Sri Dr Mohamed Ismail Merican, who is now MAHSA University Pro-Chancellor and chairman, Brig Gen (R) Datuk Mohd Shahrom Mohamad, former Prasarana Malaysia Bhd Group Chief Financial Officer, Datuk Mohd Zahir Zahur Hussain, and UAC Bhd director Datuk Koo Hock Fee. (The Edge Daily)

• YKGI Holdings Bhd is purchasing 1.4 mln new shares, representing 51.4% of the enlarged share capital, from its debtor Acesteel Industries Sdn Bhd at an issue price of RM2.45 apiece to settle a debt totalling RM3.5 mln.

• Upon completion of the proposed debt settlement, Acesteel will become a subsidiary and will assume board control of Acesteel, whilst the operation will remain with the existing management of Acesteel. (The Edge Daily)

• Lay Hong Bhd is disposing of a piece of freehold land in Kuala Selangor for RM27.6 mln to Jernih Kejora Sdn Bhd in order to monetise idle assets and at the same time pare down borrowings of the group. Lay Hong bought the 34-ac. piece of vacant land in March 1990 for RM887,000.

• Lay Hong is expected to gain RM26.7 mln from the disposal. However, based on the land's net book value of RM29.0 mln as at 31st March 2019, Lay Hong would be disposing it at a loss of RM1.4 mln. (The Edge Daily)

• Axis Real Estate Investment Trust (Axis REIT) is acquiring a property in Bayan Lepas, Penang from Ire-tex Corp Bhd for RM20.5 mln in cash. The proposed acquisition of the property would enable it to strengthen its portfolio of industrial properties.

• The property, sitting on a piece of leasehold land measuring 90,040 sq. ft comes with a double-storey factory-cumoffice building. Currently, the occupancy rate of the factory is 100.0%. The property has a recorded book value of RM22.6 mln and Ire-tex has estimated a loss on disposal of RM2.1 mln. (The Edge Daily)

• Hua Yang Bhd's 1QFY20 net profit surged 265.3% Y.o.Y to RM3.7 mln, on higher sales. Revenue for the quarter climbed 23.6% Y.o.Y to RM82.2 mln. (The Edge Daily)

Source: Mplus Research - 18 Jul 2019