Meek End To The Week, Again

• Despite opening lower at the start of the day, the local bourse managed to recoup all its intraday losses to close 0.3% higher as the key index snapped a threeday losing streak yesterday. The lower liners also finished mostly higher as the FBM Small Cap and FBM ACE gained 0.1% each, while the broader market finished mixed.

• Market breadth remained negative as losers outplayed winners on a ratio of 483-to-349 stocks, while 418 stocks traded unchanged. Traded volumes, however, fell 10.7% to 2.45 bln shares as investors turned wary of the recent volatility.

• Press Metal (+31.0 sen) anchored the FBM KLCI winners list after inking an agreement to secure more power capacity expansion in Sarawak, while Tenaga (+22.0 sen), Petronas Dagangan (+16.0 sen), Nestle (+10.0 sen) and RHB Bank (+7.0 sen) advanced. Notable advancers on the broader market include PMB Technology (+14.0 sen), UMW Holdings (+14.0 sen), Cahya Mata Sarawak (+12.0 sen), AMB Afujiya (+10.5 sen) and Innoprise Plantations (+10.5 sen).

• In contrast, Carlsberg (-20.0 sen), Hong Leong Industries (-18.0 sen), Genting Plantations (-17.0 sen) and Aeon Credit (-14.0 sen) fell on the broader market. Tashin Holdings slipped 9.5 sen in its debut on Bursa Malaysia. Meanwhile, Hong Leong Bank (-17.0 sen), KLK (- 12.0 sen), Hartalega (-8.0 sen), Hong Leong Financial Group (-8.0 sen) and Public Bank (-8.0 sen) fell on the key index.

• Asian benchmark indices ended mostly lower as the Hang Seng Index and the Shanghai Composite fell 0.8% each, taking cue from the weakness on Wall Street overnight. The Nikkei, however, managed to recover all its intraday losses to close 0.1% higher. ASEAN stockmarkets, meanwhile, closed mostly lower yesterday.

• U.S. stockmarkets erased all their intraday gains to close sharply lower as the Dow sank 1.1% after U.S. President Donald Trump announced plans to impose 10% tariffs on US$300.0 bln worth of Chinese goods beginning 1st September 2019. Likewise, the S&P 500 fell 0.9%, while the Nasdaq closed 0.8% lower.

• Earlier, European benchmark indices closed mostly higher as the CAC and DAX extended their gains by 0.7% and 0.5% respectively, boosted by the dovish interest rates stance from the European Central Bank. The FTSE, however, fell 0.03% after enduring a choppy trading session.

The Day Ahead

• It appears that the key index was making a rebound from oversold yesterday that allowed it to buck the region’s weaker trend. Although we think that there are prospects for further recovery from oversold, the continuing weakness on Wall Street may keep the recovery in check over the near term.

• As it is, global markets are rocked again by the U.S.’ move to impose new tariffs on China goods that is unlikely to leave the local market unscathed. This is set to dampen sentiments again at the end of the week, albeit we think that the downside bias could be limited as the FBM KLCI is already oversold and may provide some cushion to the potential downside, in our view.

• Back home, there remains few noteworthy leads for market players to follow and this could further keep market players on the sideline. The lack of following could further see the Malaysian stockmarkets remaining in a bind over the near term. On the downside, the supports are at the 1,635 and 1,626 levels. The resistances, meanwhile, are at 1,650 and 1,660 respectively.

• We also think that the rebound in the lower liners and broader market shares could stall as market sentiments turn warier with the fresh tariff threats. Therefore, we see the FBM Small Cap index returning to the dour side to end the week.

COMPANY BRIEF

• Magni-Tech Industries Bhd is planning to undertake a two-for-one share split to improve trading liquidity and a one-forthree bonus issue to reward existing shareholders. (The Edge Daily)

• Datasonic Group Bhd is planning to participate in the Government's open tender for a new Integrated Immigration System (IIS). The due date for submission is 19th August 2019 and the group is confident of its chances in the upcoming tender. Separately, the Government has resumed its orders for MyKads and Datasonic expect the group's financial performance to normalised moving forward. (The Edge Daily)

• Bursa Malaysia Bhd‘s 2Q2019 net profit decreased by 20.4% Y.o.Y to RM46.3 mln, from RM58.2 mln a year ago, while its revenue fell 11.8% Y.o.Y to RM124.0 mln, from RM140.6 mln in 2Q2018. The fifth straight decline in its bottomline was mainly due to lower operating revenue across the securities and derivatives markets. Nevertheless, the group declared a first interim dividend of 10.4 sen per share, payable on 30th August this year.

• Bursa’s, cumulative 1H2019’s net profit saw a 23.6% Y.o.Y decline to RM93.2 mln, from RM122.0 mln a year ago. Revenue was also down by 14.0% Y.o.Y to RM250.5 mln, from RM291.3 mln in the same period last year. Moving forward, Bursa expects better 2H2019, mainly driven by foreign fund inflows as the country’s fundamentals remain strong. (The Star Online)

• Star Media Group Bhd has proposed to vary the utilisation of the RM152.5 mln balance from its disposal of former subsidiary, Cityneon Holdings Ltd. The funds will be reallocated for working capital, in-addition to future investments needs amid the increasing short-term financial needs.

• Subsequently, RM86.0 mln will be used to fund working capital, including repaying its trade and other payables as well as staff salaries, while the remaining RM66.5 mln will still be utilised for future investments. (The Edge Daily)

• Trive Property Group Bhd has attributed the U.S. safeguard tariffs on imports of solar cells and modules from Malaysia as the reason for the termination of its jointventure (JV) with Jiangxi Fujing New Energy Technology Co Ltd.

• To recap, Trive has recently aborted the JV with the Chinese firm entered into on 10th November 2017 to undertake research and development, assembly, production, distribute and marketing of photovoltaic products such as solar cells, panels or modules. The JV was supposed to provide Trive with an opportunity to develop its solar business, which was expected to provide an additional source of earnings, while improving its financial performance. (The Edge Daily)
• Sinmah Capital Bhd is acquiring a 4.5 ha. piece of freehold vacant land within Melaka's Durian Tunggal enclave for RM7.3 mln to expand the group’s property development activities. The poultry firm will finance the acquisition through internal funds and bank borrowings. (The Edge Daily)  

Source: Mplus Research - 2 Aug 2019