Milder Rebound Ahead

• The main index reversed its negative streak at the end of last week, as other key regional indexes made strong gains as well. On the other indices, the FBM Fledging (+0.7%) and the FBM Small Cap (+0.7%) traced the key index’s positive sentiment, but the FBM ACE (-0.1%) stayed negative. On the broader market, all sectors closed positively except plantation stocks.

• The market breadth turned positive today with 505 positive stocks trading higher against 311 negative stocks. Traded volumes, however, dipped 11.8% to 2.5 bln share as broad selling pressures eased slightly from a day earlier.

• Significant performers on the FBM KLCI were Tenaga Nasional (+22.0 sen), Petronas Chemical (+19.0 sen), Petronas Gas (+16.0 sen), Nestle (+10.0 sen), and CIMB (-9.0 sen). Other gainers on the main market were Heitech Padu (+40.0 sen), BAT (+24.0 sen), Batu Kawan (+24.0 sen), Mesiniaga (+14.0 sen) and OCB (+14.0 sen).
• Stocks that closed in the negative were Allianz (-16.0 sen), Lysaght (-15.0 sen), KESM (-14.0 sen), United Plantations (- 14.0 sen) and Kuala Lumpur Kepong (- 10.0 sen. Losers on the key index were Sime Darby Plantations (-3.0 sen), Axiata (-42.0 sen), PPB (-2.0 sen), Genting Malaysia (-1.0 sen) and IOI Corporation (-1.0 sen)
• Asian stocks made strong gains on Friday as comments from a U.S. Federal Reserve official led to rising expectations the Central Bank could ease monetary policy more than expected. The Nikkei added 2.0% higher, while the Shanghai Composite rose 0.8%. In Hong Kong, the Hang Seng index advanced 1.0%, attained mostly at its final hour of trading. ASEAN stocks also closed in the green, following the positive sentiment in the region.

• On the other hand, all major U.S. indices - the Dow (-0.3%), the S&P 500 (-0.6%) and the Nasdaq Composite (-0.7%) all retreated as investors booked profits ahead of earnings releases from key technology players like Alphabet, Amazon and Facebook.

• Earlier, key European indices closed mostly higher, bumped up by expectations of a more dovish monetary stance by the U.S. Federal Reserve and stronger crude oil prices. The FTSE reversed two sessions’ of losses and ended 0.2% higher, alongside the DAX (+0.3%) and the CAC.

THE DAY AHEAD

• Expectedly, the key index managed to recover last Friday to haul back from oversold and to post decent gains. While we think that the key index could build on last Friday’s gains to further its recovery, the outlook is still indifferent, weighdown by fresh geopolitical concerns in the Middle East.

• Therefore, we think that further upsides will be limited amid the still cautious underlying market environment. With few domestic leads, the near term upsides will further curtail the potential upsides as we also think that there will be some mild quick profit taking activities after Friday’s gains. On the upside, we see resistances at the 1,660 and 1,667 levels, while the main support is still at the psychological 1,650 level, followed by the 1,644 level.

• The FBM Small Cap index is still looking toppish even after its recent pullback. However, the recovery could still persist on bouts of renewed buying interest. Still, we think the gains could be more measured amid the still toppish market conditions.

COMPANY BRIEF

• Green Packet Bhd is tying up with Bank Islam Malaysia Bhd to offer e-payment and cashless payment services in universities and higher learning institutions in the country. Green (The Star Online)

• Sapura Resources Bhd's unit, SRB One has inked a joint venture (JV) agreement with Rolls-Royce's subsidiary, MTU Asia to distribute the latter's products to marine (naval and commercial), rail, construction and industrial, mining, agriculture, oil and gas, and power generation market sectors in Malaysia.

• MTU Power Systems will be the exclusive distributor of MTU products in Malaysia for a decade while also undertaking the sales and servicing of products and original equipment packaging solutions from MTU. (The Edge Daily)

• T7 Global Bhd's units have secured three contracts worth RM100.0 mln in total. It inked an agreement with VME Process Asia Pacific Pte Ltd for the provision of engineering, fabrication, procurement and supply of modular process packages in India.

• It also received a service order from FPSO Ventures Sdn Bhd for the provision of remotely operated vehicles, diving support vessel, manpower and equipment for subsea services for FPSO BUNGA Kertas. Meanwhile, another subsidiary, T7 Gastec Sdn Bhd has received a letter of award from PTS Resources Sdn Bhd for the supply, delivery, installation, testing and commissioning of battery system including its associate engineering services and accessories. (The Edge Daily)
• Seacera Group Bhd wholly-owned subsidiary, Seacera Properties Sdn Bhd (SPSB) has received a notice of demand and termination from Megapower (M) Sdn Bhd demanding a payment of RM6.3 mln in respect of the purchase price paid to SPSB for a piece of land.
• SPSB had failed to comply with the terms of the sale and purchase agreement dated 2nd February 2012 and failing which, it said SPSB will be charged interest at 8.0% per annum on a day-today basis until receipt of full payment. (The Edge Daily)

• Tasek Corp Bhd has received a notice from HL Cement (Malaysia) Sdn Bhd and Ridge Star Ltd for the extension of their unconditional voluntary takeover offer for shares in the company that the offerors do not own, to 5th August 2019.

• This is the second extension for the offer, after the offerors had previously extended the closing date to 22nd July 2019, from 9th July 2019. (The Edge Daily)

• Abdul Rahim Awang has resigned as President of Barakah Offshore Petroleum Bhd and Nik Hamdan Daud will take over the post effective 19th July 2019. Abdul Rahim joined the group on 2nd September 2013 as the Vice President and Chief Corporate Officer. (The Edge Daily)

• Fajarbaru Builder Group Bhd has bagged an RM27.2 mln contract from Knusford Bhd linked to the Setiawangsa–Pantai Expressway project, also known as DutaUlu Kelang Expressway Phase-3. The job involves the construction of bridge structure works for the Setiawangsa to Melati stretch of the highway. The tenure of the contract is seven months, ending on 21st February 2020. (The Edge Daily)

• The Board of Directors of APFT Bhd has initiated a civil suit in the High Court against its former directors for breaches of fiduciary duties during their tenure as directors of the company. The suit was filed against its former Chairman Datuk Faruk Othman, as well as three other former directors Arif Faruk, Tan Boon Leng and Tan Nyap Keong @ Tony Tan. (The Edge Daily)

• AirAsia Group Bhd and AirAsia X Bhd (collectively AirAsia) are to appeal against the High Court’s ruling that they need to fork out RM40.7 mln for uncollected passenger service charges. AirAsia will apply for a stay of execution and challenge Malaysia Airports Holdings Bhd actions. (The Edge Daily)

• Atlan Holdings Bhd is exploring the possibility of listing its subsidiary, United Industries Holdings Sdn Bhd on the Growth Enterprise Market of the Stock Exchange of Hong Kong. United Industries is an investment holding company and its subsidiaries are principally involved in the manufacturing, marketing and distribution of automotive component parts. (The Edge Daily)

Source: Mplus Research - 22 Jul 2019