Lack Of Leads To Keep Market Subdued

• Taking cue from the weakness in the regional indices, the FBM KLCI ended in the red, alongside selected banking heavyweights. The majority of lower liners - the FBM Fledging and the FBM Small Cap finished lower, although the FBM ACE (+0.6%) bucked the general weak sentiment. Meanwhile, the broader market was splashed in red, with the exception of the Technology and Telecommunication & Health sectors.

• Market breadth was subdued as decliners beat the advancers on a ratio of 508-to-297 stocks. Traded volumes, however, gained 6.1% to 2.65 bln share as investors book profits ahead of the U.S. GDP growth data.

• On the Main Board, Hong Leong Bank (- 26.0 sen), Kuala Lumpur Kepong (-20.0 sen), Petronas Chemicals (-11.0 sen), Maxis (-7.0 sen) and Petronas Gas (-6.0 sen) were downward pressured, while main board decliners include BAT (-52.0 sen), Batu Kawan (-34.0 sen), Ayer Holdings (-30.0 sen), Kluang Rubber (- 21.0 sen) and Panasonic Manufacturing (-18.0 sen).

• On the other hand, top gainers were Pentamaster (+17.0 sen), United Plantations (+14.0 sen), Kuchai Development (+13.0 sen), Perusahaan Sadur Timah (+12.0 sen) and Carlsberg (+10.0 sen). Tenaga Nasional (+10.0 sen) and Press Metal (+8.0 sen) clawed back its earlier losses and shoot up in the eleventh hour to secure their place in the positive territory, alongside RHB Bank (+3.0 sen), Axiata (+2.0 sen) and Digi (+2.0 sen).

• Key regional indexes ended mostly lower as investors shrugged off the euphoria from potentially lower interest rates and focus on the upcoming earnings releases of listed companies. The Nikkei erased its previous gains, alongside the Hang Seng index (-1.4%), while the Shanghai Composite closed 1.3% lower, following the introduction of a Nasdaq-style Chinese board in Shanghai. ASEAN equities also traced the key markets and closed mostly in the red.

• Wall Street rebounded on Monday as investors cheered a potential Apple-Intel deal which will see Apple acquiring Intel’s modem chip business. The Dow advanced, while the S&P 500 hit a record high, supported by gains in Haliburton after the O&G services company reported stronger-than-expected earnings. The Nasdaq Composite also added 0.7% to close above the 8,200 psychological level.

• U.K. equities were mostly positive as the FTSE (+0.1%) rolled ahead with its upward trajectory, although upsides were capped by rising geopolitical tensions between the U.K. and Iran. Similarly, the DAX and the CAC also added 0.2% and 0.3% respectively as the earnings remain underway.

THE DAY AHEAD

• There was no follow-through support yesterday to extend last Friday’s recovery and this has left the key index further into an indifferent mode. We think that there is still a lack of direction and we continue to think that the key index is likely to drift over the near term.

• As it is, the key index is on a consolidation spell after a strong sixweek runup that has left it overbought. Meanwhile, the ongoing pullback is nearing its course as the key index looks to find a support around the 1,650 level, which it did yesterday. However, a firm rebound remains elusive as yet, given that there are still few noteworthy leads to entice fresh buying. Therefore, we think that the broadly sideway trend is likely to persist over the near term. Apart from the 1,650 support, the other support is at the 1,644 level. The resistance, meanwhile, are at 1,660 and 1,667 respectively.

• The broader FBM Small Cap index is also undergoing a consolidation spell after its strong two-month uptrend. We think that profit taking activities will continue as a result and this could see the downside bias remaining for the time being. Other broader market shares are also consolidating and this is likely to prolong the mixed-to-lower environment, in our view.

COMPANY BRIEF

• LTKM Bhd’s Managing Director, Datuk Tan Kok and his family have offered RM1.35 a share for the remaining shares of the chicken egg producer not owned by them, under an unconditional voluntary takeover offer.

• The offer price represents a 21.6% premium over its last transacted price of RM1.11 on 18th July 2019. The joint offerors, who hold a total stake of 68.3% of the issued shares, said that they do not intend to maintain the company’s listing status on the Main Market of Bursa Malaysia, upon completion of the takeover. (The Edge Daily)

• An Indonesian unit of MyEG Services Bhd is purchasing a 40.0% stake in PT Cartenz Inti Utama (PT CIU) for US$10.0 mln (approximately RM41.1 mln) as the egovernment services provider seeks to expand its business outside of Malaysia. The acquisition would allow the group to expand its Indonesian presence, in particular to roll-out its tax monitoring system regionally as well as to redeploy some of its local systems in other regional markets.

• The acquisition of 40.0% of PT CIU would help accelerate the present 5,000 installations it maintains in Indonesia, to a higher targeted number of installations. The group is aiming to get permission from relevant local government units, to install 15,000 tapping boxes in Jakarta, Bogor, Depok, Tangerang and Bekasi. (The Edge Daily)

• D'Nonce Technology Bhd’s Director, Tho Yow Yin has been appointed as Chief Executive Officer of the company with immediate effect. Tho had earlier been named as an Independent and NonExecutive Director of the hard disk drive contract manufacturer on 1st July 2019.

• Tho succeeds Lim Teck Seng who resigned after the High Court ruled as invalid. (The Edge Daily)

• Perdana Petroleum Bhd is extending RM682.5 mln in financial assistance to its 60.5%-owned subsidiary Dayang Enterprise Holdings Bhd, in order to help the latter establish new means to repay its debts.

• The financial assistance is needed to facilitate the establishment of Dayang’s proposed sukuk programme, which is part of a group-wide debt restructuring exercise undertaken by Dayang. (The Edge Daily)

Source: Mplus Research - 23 Jul 2019