Possible End-of-Week Rebound

• The FBM KLCI remains in the red as the key index slid a further 0.5%, following the losses from other key indexes. Meanwhile, the FBM ACE (+0.2%) managed to reverse its losses as the FBM Fledging (-0.3%) and FBM Small Cap (-1.1%) remains negative. On the broader market, all but three sectors remained in the red.

• The market breadth remains largely negative as 575 losing stocks continue to outpace 270 winners, while 388 stocks remained unchanged. Traded volumes dipped 25.9% to 2.83 bln as broad selling pressures eased slightly from a day earlier.

• Notable losers on the key index were Petronas Chemicals (-30.0 sen), Petronas Dagangan (-22.0 sen), Petronas Gas (-18.0 sen), Tenaga Nasional (-14.0 sen), and Sime Darby Plantations (-11.0 sen). Underperformers on the main market also include Batu Kawan (-42.0 sen), AEON Credit (-14.0 sen), LPI Capital (- 10.0 sen), Magnum (-10.0 sen) and Nestle (-10.0 sen).

• On the other side of the spectrum, gaining stocks yesterday included British American Tobacco (+20.0 sen), Sam Engineering and Equipment (+16.0 sen), Zhulian (+16.0 sen), Carlsberg (+12.0 sen) and Chin Teck Plantation (+10.0 sen) Meanwhile, winners on the key index comprised of Top Glove (+50.0 sen), PPM (+40.0 sen), Sime Darby (+30.0 sen), Genting (+20.0 sen) and Press Metal Aluminium (+20.0 sen)

• Asian benchmark indices remained negative yesterday as stocks in Japan took the largest hit with the Nikkei closing 2.0% lower that yesterday amid a renewed threat to trade, undermining relief from the resumption of U.S-China trade talks. Other Asian bourses followed suit with the Shanghai Composite (-1.0%) and the Hang Seng index (-0.5%) also closing in the red. Indexes in the ASEAN region also closed largely in the negative.

• U.S. indexes snapped its three-day losing streak as the Dow (+0.01%) gained marginally, while the S&P 500 rose 0.4% and the Nasdaq Composite gained 0.3% after comments from a top Federal Reserve official led to increasing bets that the Central Bank will ease monetary policy more aggressively.

• European stocks closed lower on Thursday as investors digested fresh corporate results and kept an eye on global trade developments. The FTSE fell by 0.6%, while the DAX (-0.9%) and the CAC (-0.4%) dipped further into the negative.

THE DAY AHEAD

• There were no reprieve for Malaysian stocks as they continue to endure substantive selling and profit taking activities amid the market undertone that remains on the wary side. As it is, President Trump continues to bring out rhetorics on the trade dispute with China that is dampening sentiments further.

• After the past few session’s selldown, however, the FBM KLCI is tethering on oversold and this could prompt bargain hunting activities that could allow the key index to end the week on a more positive note. However, we think the any upsides are likely to be mild as the overall market sentiments are still on the cautious side. Therefore, we think that the rebound could be limited to no more than the 1,655 level. Thereafter, the resistance is at the 1,660 level. The supports, meanwhile, are at 1,643 and 1,641 levels respectively.

• The FBM Small Cap Index may also see a recovery in tandem with the gains in the big caps to claw back some of its recent losses. Again, we think that the upsides will be measured given the still cautious undertone. Similarly, we also think that the broader market shares could also tip higher over the near term on a recovery trend.

COMPANY BRIEF

• Scomi Group Bhd has revise its proposed issued share capital reduction from RM225.0 mln to only RM3.0 mln. The credit arising might be used to further set-off against future losses of the company in the near future.

• The revised proposal would give rise to a total credit of RM222.0 mln compared with the earlier amount of RM185.0 mln. Under the minimum scenario of RM3.0 mln comprising 1.09 bln shares is based on the assumption none of the outstanding 491.3 mln Warrants B are exercised into new shares before the proposed share capital reduction. Under the maximum scenario it would be RM106.2 mln comprising 1.59 bln shares, assuming the outstanding 491.3 mln Warrants B are converted into shares. (The Star Online)

• Sarawak Cable Bhd is selling a piece of freehold land together with industrial premises in Klang to Supermax Corp Bhd for RM65.0 mln. (The Edge Daily)

• Revenue Group Bhd is collaborating with Hong Leong Bank Bhd to offer payment acceptance and services to Singapore's NETS cardholders to shop in retail outlets under GCH Retail (Malaysia) Sdn Bhd and Guardian Health And Beauty Sdn Bhd. (The Edge Daily)

• AirAsia Bhd will have to pay at least RM40.6 mln to Malaysia Airports Holdings Bhd (MAHB), over unpaid passenger service charges (PSC) from July 2018 to December 2018. This follows the High Court dismissing the carrier's strike-out application and allowing summary judgments by MAHB be entered on AirAsia in the three suits against the company. (The Edge Daily)

• KNM Group Bhd has bagged a US$4.3 mln (RM17.5 mln) contract to supply shop-assembled large drums for the Petrochemical Complex in southern Vietnam. The contract is for Package A1 – Olefins Plant that was awarded by TPSK Consortium. (The Edge Daily)

• Carimin Petroleum Bhd has been awarded a contract by SEA Hibiscus Sdn Bhd for the provision of mechanical and piping maintenance services for the Labuan Crude Oil Terminal by Hibiscus Petroluem Bhd, which operates the North Sabah Enhanced Oil Recovery Production Sharing Contract (PSC). The PSC encompasses the Labuan Crude Oil Terminal and the fields of St Joseph, South Furious, SF30 and Barton, all located offshore Sabah. (The Edge Daily)

• D'Nonce Technology Bhd said that its Group Chief Executive Officer, Lim Teck Seng has been removed. The removal followed a ruling by the Kuala Lumpur High Court on 11th July 2019 that Lim's re-election as a director at the Annual General Meeting on 17th June 2019 was invalid. The ruling arose from a suit filed by Singapore investment company, Blackstream Investments Pte Ltd, which has a 24.1% stak in D'Nonce. (The Edge Daily)

Source: Mplus Research - 19 Jul 2019