Need More Impetus

• The FBM KLCI failed to trace the positive results of Asian Pacific indexes as it closed 0.2% lower than the previous session. On the contrary, lower liners closed in the green, as the FBM Fledging (+0.1%) and the FBM Small Cap (+0.6%) and the FBM ACE (+0.4%) rallied. In the broader market, most subsectors closed negatively, tracing the sentiment of the key index.

• Market breadth remained positive as positive stocks marginally outpaced negative stocks at a ratio of 445-to-431 stocks as traded volumes jumped 16.2% to 3.22 bln.

• Among the key underperformers on the FBM KLCI Index yesterday includes Petronas Gas (-32.0 sen) Petronas Chemicals (-19.0 sen), Hong Leong Bank (-12.0 sen), Nestle (-10.0 sen) and Public Bank (-10.0 sen). Across the Main Board, biggest losers were Malaysian Pacific Industries (-16.0 sen), Sarawak Plantation (-14.0 sen), Latitude Tree Holdings (-13.0 sen), Metrod Holdings (- 13.0 sen) and Takaful Malaysia (-12.0 sen)

• On the other hand, SAM (+21.0 sen), Ajinomoto (+20.0 sen), KESM Industries (+20.0 sen), Yinson (+15.0 sen) and DRM-Hicom (+14.0 sen) were among the biggest winners on the broader market. Winners on the key index were Genting Malaysia (+25.0 sen), Genting (+22.0 sen), Hartalega (+10.0 sen), Dialog Group (+3.0 sen) and Axiata (+2.0 sen).

• Stocks in the Asian region were mostly higher on Wednesday following developments on the U.S.-China trade front. Mainland Chinese shares rose on the day with the Shanghai composite adding 0.8%, while the Nikkei rose 0.4% as with the Hang Seng index in Hong Kong that was up 0.2% at its close. However, ASEAN indices failed to trace the positive sentiments of its regional peers and closed largely negatively.

• The S&P 500 and Nasdaq Composite reached all-time highs on Wednesday, propelled by a rally in chip stocks as investors shook off regulatory concerns facing Big Tech. The broad index gained a record high of 0.5% while the tech-heavy Nasdaq upped nearly 0.9%. However, the Dow Jones Industrial Average closed - 0.3% lower as investors pored through disappointing earnings from Boeing and Caterpillar.

• In Europe, markets closed mostly lower as market participants digested a fresh round of corporate earnings and disappointing economic data out of France and Germany. The FTSE dipped 0.7%, while the CAC dropped 0.2%. In Germany, the DAX rose 0.3% despite Deutsche Bank’s reports of a 3.2 bln Euro net loss for the second quarter.

THE DAY AHEAD

• Fresh buying interest remains thin yesterday and this saw the key index succumbing to further weakness. In view of the recent market trend, it appears that further impetuses are required to provide the lift for the FBM KLCI stocks to mount an uptrend.

• Hence, we think that the key index is likely to remain in a drifting mode for longer with no reversal to the downside bias apparent as yet. The immediate support is at the 1,650 psychological level, followed by the 1,648 level. On the other hand, the resistances are at 1,658- 1,660 levels, followed by the 1,667 level.

• The lower liners have bucked the performance of the key index and have gained ground over the past few sessions, cumulating in the FBM Small Cap index making a pass at its year high level yesterday. With the toppish conditions still a feature, however, we think that the year-high level will remain a formidable level to pierce convincingly. As such, we think that the upsides will be still limited over the near term.

COMPANY BRIEF

• Hibiscus Petroleum Bhd has struck first oil in North Sabah. It said that they have successfully drilled and completed the SJ105A well at the St Joseph oilfield.

• This is the first of three infill wells being drilled at the St Joseph oilfield, which part of the 2011 North Sabah enhanced oil recovery production sharing contract (PSC). Two more oil production wells are currently being drilled at St Joseph oilfield, which will be followed by three new oil production wells and one water injection well in the SF30 oil field. SEA Hibiscus assumed operatorship of the North Sabah PSC on 31st March 2018 on a 50:50 joint venture working interest partner with Petronas Carigali Sdn Bhd. (The Star Online)

• GHL Systems Bhd has teamed up with Thanachart Bank Public Company Ltd to jointly launch smart payment terminals in Thailand with the partnership offering multiple payment acceptances in a single device called “Smart All in One”. As of March 2019, GHL Thailand has an epayment touchpoint network of 57,100 acceptance points in the country. (The Edge Daily)

• Axis Real Estate Investment Trust (REIT)’s 2Q2019 net property income (NPI) grew 15.8% Y.o.Y to RM47.7 mln on higher property income. Revenue for the quarter climbed 14.2% Y.o.Y to RM54.2 mln.

• For 1H2019, cumulative NPI rose 19.9% Y.o.Y to RM97.0 mln. Revenue for the period increased 17.0% Y.o.Y to RM108.0 mln. A second interim income distribution per unit of 2.4 sen, payable on 30th August 2019, was declared. (The Edge Daily)

• Gadang Holdings Bhd’s 4QFY19 net loss stood at RM3.4 mln vs. a net profit of RM23.3 mln recorded in the previous corresponding quarter, due to the recognition of variation orders at its construction division and lower profit from its Johor based Capital City project. Revenue for the quarter, however, grew 7.0% Y.o.Y to RM196.9 mln.

• For FY19, cumulative net profit plunged 55.0% Y.o.Y to RM43.5 mln. Revenue for the year, however, added 18.0% Y.o.Y to RM699.9 mln. (The Edge Daily)

• Vizione Holdings Bhd and Engineering Protocol Sdn Bhd (EPSB) inked a Memorandum of Collaboration for a potential joint investment to bid in the third round of the RM2.00 bln Large Scale Solar Photovoltaic Plants (LSS) project by the deadline for submission to the Energy Commission of Malaysia on 19th August 2019. (The Edge Daily)

• Dagang NeXchange Bhd (DNeX) has received a two-year extension from the Government for the National Single Window for Trade Facilitation contract to 31st August 2021. DNeX has been the operator of the NSW for Trade Facilitation since its launch in 2009. (The Edge Daily)

• Kumpulan Perangsang Selangor Bhd has received shareholders' approval to fully acquire Toyoplas Manufacturing (M) Sdn Bhd and its subsidiaries for RM311.3 mln. Toyoplas, which is involved in the plastic injection moulding business and has an integrated capability from mould fabrication, precision injection moulding and secondary processes to full assembly of parts or products. (The Edge Daily)

Source: Mplus Research - 25 Jul 2019