Weakness Prevails

• The FBM KLCI started off the week on a downbeat manner as the key index gapped down and lingered in the negative territory throughout the trading session before closing 1.0% lower on Monday. The lower liners was not spared from the selloff as the FBM Small Cap (-2.2%), FBM Fledgling (- 1.3%) and FBM ACE (-2.2%) all extended their losses, while the broader market was splashed in red, dragged down by the energy sector (-2.6%).

• Market breadth remained negative as losers trounced winners on a ratio of 827-to-163 stocks, while 288 stocks traded unchanged. Traded volumes, however, added 19.9% to 2.67 bln shares as selling activities escalated.

• More than two-thirds of the key index components closed in the red, led by Petronas Dagangan (-40.0 sen), followed by KLK (-34.0 sen), Public Bank (-22.0sen), Petronas Chemicals (-20.0 sen) and RHB Bank (-14.0 sen). Among the biggest decliners on the broader market were Fraser & Neave (-60.0 sen), Carlsberg (-44.0 sen), KESM Industries (-24.0 sen), United Plantations (-24.0 sen) and G3 Global (-18.0 sen).

• On the contrary, Hong Leong Industries (+38.0 sen), Tasek Corporation (+24.0 sen), Dutch Lady (+10.0 sen), MSM (+10.0 sen) and Panasonic Malaysia (+10.0 sen) led the broader market winners list. In view of the sharp selling pressure, there were no winners on the key index.

• Asian benchmark indices suffered another blow as selling activities intensified on Monday with the Nikkei falling 1.7%. The Shanghai Composite extended its losses by another 1.6% after the Chinese Yuan skid to 11 year low against the Greenback, while mounting political unrest sent the Hang Seng Index lower (-2.9%) to wipe off all its year-to-date gains. ASEAN stockmarkets, meanwhile, remain painted in red yesterday.

• U.S. stockmarkets endure their biggest daily fall year-to-date as the Dow sank 2.9% to close below the 26,000 psychological level on the escalating trade tension between the U.S. and China. Likewise, the S&P 500 slipped 3.0% to close below the 2,900 psychological level with all eleven major sectors in the red, while the Nasdaq finished 3.5% lower.

• Earlier, European benchmark indices – the FTSE (-2.5%), CAC (-2.2%) and DAX (- 1.8%) all extended their losses, mirroring the slump in Asian equities. On a brighter note, U.K. services sector in July 2019 hit nine-month high at 51.4.

THE DAY AHEAD

• Market conditions remain frail after yesterday’s steep drop with global equities continuing to be gripped by the escalating trade war between the U.S and China. Under the prevailing environment, we see stocks on Bursa Malaysia continuing to head lower over the near term as the market uncertainties are amplified.

• Concerns over the slowing global economy remains unabated after the trade war moved into a more severe phase that shows little hope for a quick reprieve. Fears of a prolonged trade tiff will also continue to keep market sentiments on the cautious side and send more market players to the sidelines until there is renewed clarity in the market’s direction.

• With sentiments ebbing, coupled with the rising uncertainties, the 1,600 support is now under threat and if it gives way, the next support is pegged at the 1,590 level. The resistances, meanwhile, are at 1,620 and 1,630 respectively.

• The FBM Small Cap Index is faring worse with the selling escalating among the lower liners as sentiments turn weaker. We see the downside trend continuing as investor sentiments is turning increasingly frail and the selling is likely to remain broad-based.

COMPANY BRIEF

• MGB Bhd has inked a joint-venture agreement with land owner Aset AZG Sdn Bhd to develop 1.9 ac. of leasehold land at Cameron Highlands, Pahang, into a block of serviced apartment with a gross development value of RM107.0 mln. (The Edge Daily)

• Seal Incorporated Bhd is planning to buy 20 units of commercial shop lots located in Kuala Lumpur from Dwitasik Sdn Bhd for a combined purchase price of RM21.8 mln for investment purposes. The acquisition will be financed by internal funding. (The Edge Daily)

• Ni Hsin Resources Bhd has signed an exclusive distributorship agreement with Japanese kitchen cookware manufacturer, Wonder chef Co Ltd to market the latter's products in the Asean market.

• The products will include woks and pressure cookers and general merchandising stores, as well as via television shopping to reach out to a wider consumer group. (The Edge Daily)

• Sunway Real Estate Investment Trust (Sunway REIT) has announced that the market value of its Malaysian properties rose to RM7.9 bln as at 30th June, 2019, from RM7.8 bln previously, for a RM173.0 mln surplus, following revaluation of its assets. The group’s assets has a net revaluation surplus of RM108.0 mln after taking into account capital expenditure of RM65.0 mln, based on the its unaudited FY19 results. (The Edge Daily)

• FGV Holdings Bhd (FGV) said the complaints panel of the Roundtable for Sustainable Palm Oil (RSPO) has lifted the suspension on FGV Serting Complex and reinstated its RSPO certification, effective 5th August 2019. This comes after FGV has fulfilled the major conditions that were laid out for rectification.

• Separately, FGV‘s Memorandum of Understanding (MoU) with Sinograin Oil Corp, to collaborate for the supply, storage, processing and distribution of palm oil-based products in China, has lapsed upon its expiry on 14th May 2018. This is the third MoU with Chinese company that has lapsed upon its expiry as both parties were unable to come to an agreement on the specific terms of trade. (The Edge Daily)

• Xingquan International Sports Holdings Ltd will be delisted in less than two weeks, together with China Stationery Ltd. To recap, the two China-based companies is facing regulatory action after continuously failing to issue their annual reports and audited financial statements, months after the stipulated time frame specified under the listing requirements.

• Both companies are now going to be on its way to be delisted on 16th August 2019 unless they submit an appeal to Bursa Securities by 13th August, 2019. (The Edge Daily)

• My EG Services Bhd (MyEG) has denied that neither Umno nor its proxies have a substantial stake in the company, saying such claims are “erroneous, speculative and baseless". The group also claimed that it does not have, either at any time in the past or in the present, any substantial shareholdings held by Umno or any political parties in Malaysia, whether directly or indirectly through proxies. (The Edge Daily)

• Asia Media Group Bhd’s ousted NonExecutive Director, Paul Jong Jun Hian claims his signature was forged on a directors’ circular resolutions. To recap, Asia Media received a copy of police report lodged by Jong, who has also been removed in July 2019 alleging his signature was forged on a DCR to approve the release of the first announcement with regards to the group being categorised as a Practice Note 17 (PN17) company. (The Edge Daily)

Source: Mplus Research - 6 Aug 2019