Still Slipping And Sliding

• The FBM KLCI ended the week on a muted note as investors booked profits ahead of the extended weekend break. On a W.o.W basis, the key-index also fell 0.7% to 1,615.1, weighed down by the renewed U.S.-China trade tensions. The lower liners – the FBM Small Cap (+0.2%), FBM Fledgling (+0.2%) and FBM ACE (+1.0%) also extended their gains, while the broader market closed mixed.

• Market breadth was positive as gainers outweigh the losers on a ratio of 447-to- 354 stocks, although traded volumes, narrowed by 7.1% to 1.97 bln shares ahead of the long weekend.

• Significant key index decliners include Hong Leong-affiliated stocks like Hong Leong Financial Group (-26.0 sen), and Hong Leong Bank (-10.0 sen), followed by Nestle (-30.0 sen), Petronas Dagangan (-10.0 sen) and Kuala Lumpur Kepong (-8.0 sen). Broader market underperformers were United Plantations (-40.0 sen), Fraser & Neave (-20.0 sen), Carlsberg (-18.0 sen), Westports (-13.0 sen) and Heineken Malaysia (-12.0 sen).

• In contrast, BAT (+50.0 sen), Ayer (+26.0 sen), Sungei Bagan Rubber (+14.0 sen), Syarikat Takaful Malaysia (+14.0 sen) and Lotte Chemical Titan (+13.0 sen) advanced. Top five outperformers on the key-index, meanwhile, were Public Bank (+10.0 sen), Petronas Gas (+10.0 sen), Petronas Chemicals (+9.0 sen), Press Metal (+5.0 sen) and Sime Darby (+3.0 sen).

• The Hang Seng Index underperformed its regional peers after closing 0.4% lower amid geopolitical unrest which resulted in the partial closure of the Hong Kong International Airport on Monday. In contrast, the Shanghai Composite (+1.5%) extended its gains, while the Nikkei was closed for a holiday. The majority of ASEAN stockmarkets, meanwhile, ended higher.

• Wall Street also took another beating, dragged down by the lingering trade concerns with the Dow (-1.5%) tumbling more than 300 points to close at 25,897.7 points, while the Nasdaq and the S&P 500 closed down by 1.2% each.

• U.K. equities were splashed in the red, with the FTSE down by 0.4% on Monday, weighed down by losses in giant banks, while the DAX and the CAC finished lower by 0.1% and 0.3% respectively.

THE DAY AHEAD

• The broad market conditions remains far from certain as the global market environment is still gripped by the combination of slowing global economic growth prospects that is largely contributed by the unresolved U.S-China trade dispute and the prognosis of slower corporate earnings growth going forward.

• As it is, global equities are still consolidating and this will sustain the choppy trend on Bursa Malaysia stocks over the near term. The uncertain market conditions are also providing few compelling buys and the cautious undertone is set to leave more market players on the sidelines until clarity returns. Under the prevailing environment, the downside bias is set to continue and send the key index lower over the near term. The supports around the 1,600-1,610 levels will remain in play, while the resistances are at 1,620 and 1,630 respectively.

• Elsewhere, the lower liners and broader market shares’ uptick may stall after the latest round of weakness in global markets. Volatility is likely to return, but the downside risk could be measured as the selling pressure has eased after the stocks endured steep falls recently.

COMPANY BRIEF

• Lotte Chemical Titan Holding Bhd (LCT) is proposing to divest its 49.0% equity interest in PT Lotte Chemical Indonesia (LCI) to its major shareholder, Lotte Chemical Corporation, Korea (LCC). The move would enable LCC to jointly fund the company’s integrated petrochemical facility (IPF). The proposed divestment is a related party transaction and therefore will be subject to shareholders’ approval. (The Star Online)

• Press Metal Aluminium Holdings Bhd has proposed an Islamic Medium Term Notes (IMTN) programme of up to RM5.00 bln to raise funds for its Shariah-compliant general corporate purposes. The proceeds from the sukuk issuance shall be utilised for the group’s general corporate purposes including capital expenditure, working capital requirements, investments and refinancing of existing financing/borrowings. (The Edge Daily)

• GSB Group Bhd’s controlling shareholder, the Tee family, is selling their real estate assets to the company for RM714.5 mln. Upon completion of the asset divestment to GSB, the Tee family’s shareholding will be enlarged to 67.3%%from 40.8%, plus it will receive RM100.0 mln cash. The asset injection by the Tee family, which is deemed to be a related party transaction, will be settled by a combination of cash, Redeemable Convertible Preference Shares and share subscription deals. (The Edge Daily)

• TDM Bhd has entered into agreements with two companies pertaining to the development of biogas plants with power generation facilities in two palm oil mills in Terengganu. The two mills are the Kemaman Palm Oil Mill (KPOM) and Sg Tong Palm Oil Mill (STPOM). (The Edge Daily)

• PRG Holdings Bhd's 54.2%-owned subsidiary, Furniweb Holdings Ltd has reported a net loss of RM4.0 mln 1H2019 vs. a net profit of RM612,000 in the previous corresponding period. The loss was mainly due to a one-off professional fee of RM1.5 mln in relation to an acquisition as well as total marketing and distribution cost and pre-operating and administrative expenses totalling RM3.7 mln incurred by Furniweb’s retail division.

• The company anticipates prospects for its manufacturing division to remain challenging in the near future as customers remain cautious on purchases amid weaker demand as a result of the ongoing US-China trade spat and Brexit. (The Edge Daily)

• Maxwell International Holdings Ltd will be de-listed on 22nd August 2019. The China-based sport shoes maker has failed to comply with its obligation to regularise its financial health within the stipulated time frame. (The Edge Daily)

• XOX Bhd is teaming up with Thai stateowned telecommunications firm, TOT PCL to explore the mobile virtual network operator market in Thailand, connecting in technicality and testing the mobile telecommunication systems as well as other commercial operations. (The Edge Daily)

Source: Mplus Research - 13 Aug 2019