More Upsides As Sentiments Improves

• The FBM KLCI (+0.5%) rebounded to close a hair away from the 1,600 psychological level, in line with the gains across its regional peers on the positive developments in Hong Kong’s where the controversial Extradition Bill was withdrawn. The lower liners – the FBM Small Cap (+0.9%), FBM Fledgling (+0.8%) and FBM ACE (+0.6%) all advanced, while the REIT (-0.1%) and Utilities (-0.2%) sector underperformed the positive broader market.

• Market breadth turned positive as advancers outpaced decliners on a ratio of 479-to-308 stocks, while 398 stocks traded unchanged. Traded volumes added 10.3% to 2.49 bln share, boosted by bargain hunting activities in recently beaten down stocks.

• Anchoring the winners list on the FBM KLCI was Nestle (+RM1.00), followed by Petronas Dagangan (+96.0 sen), Petronas Gas (+38.0 sen), KLK (+24.0 sen) and Public Bank (+18.0 sen). Among the biggest advancers on the broader market include Fraser & Neave (+RM1.00), Shangri-La (+27.0 sen), Hong Leong Industries (+16.0 sen) and Dufu Technology (+15.0 sen). Dayang Enterprise added 6.0 sen after securing a contract from Petronas.

• In contrast, notable losers on the broader market were BAT (-44.0 sen), BLD Plantations (-21.0 sen), Batu Kawan (-18.0 sen), Latitude Tree (-17.0 sen), Yinson (-15.0 sen) and Ajinomoto (-14.0 sen). There were only four decliners on the local bourse – Hong Leong Financial Group (-10.0 sen), Top Glove (-2.0 sen), AmBank (-1.0 sen) and Genting (-1.0 sen).

• Asian benchmark indices advanced as the Nikkei (+0.1%) extended its gains after recovering all its intraday losses. The Shanghai Composite rose 0.9%, while the Hang Seng Index (+3.9%) rallied on reports that Hong Kong Leader Carrie Lam plans to formally withdraw the extradition bill. ASEAN equities, meanwhile, closed mostly higher on Wednesday.

• U.S. stockmarkets rebounded as the Dow gained 0.9% on the easing political tension in Hong Kong. Likewise, the broader market saw the S&P 500 (+1.1%) advancing with all eleven major sectors in the green, while the Nasdaq jumped by 1.3%.

• Earlier, European benchmark indices – the FTSE (+0.6%), CAC (+1.2%) and DAX (+1.0%) all recovered all their previous session losses, mirroring the gains in Asia’s equities. Market sentiment was also boosted by the Eurozone’s strongerthan-expected Markit Composite Purchasing Managers Index that rose to 51.9 in August 2019 – beating economists’ estimates of 51.8.

The Day Ahead

• With improved market sentiments brought about by the easing Hong Kong political crisis and Malaysia’s better-thanexpected export performance, there was renewed impetus for stocks on Bursa Malaysia to head higher yesterday and to cast aside the wariness over the market’s condition.

• We see the positivity continuing as the near term market conditions are showing some signs of stability that could provide further leeway for stocks to gain ground over the near term. As it is, the market has been deprived of positive leads for some time now and we see market players capitalising on the calmer market conditions to bargain hunt some of the beaten down stocks.  Therefore, we see the key index passing the 1,600 level and possibly target the next resistance at 1,610 over the near term. On the downside, the supports are at the 1,590 and 1,580 levels respectively.

• We also think that FBM Small Cap, FBM Fledgling and FBM ACE stocks will gain further ground amid the more positivity market undertone that could entice retail players back into the market. However, there will still be hit-and-run tactics and rotational plays that could limit the near term gains, in our view.

COMPANY BRIEF

• PPB Group Bhd has confirmed that it is not in discussion with FGV Holdings Bhd following the latter’s previous announcement that it was exploring strategic alliances in the sugar refinery industry via subsidiary MSM Malaysia Holdings Bhd. (The Edge Daily)

• UEM Edgenta Bhd is aiming to drive growth with its healthcare support business as the group eyes new tenders in Singapore amid the government's move to re-cluster healthcare facilities. The Singaporean Health Ministry's exercise is represents an opportunity for the group to bulk up its contracts, adding on to RM540.1 mln worth of contracts it secured in the republic so far.

• Its healthcare support operations in Malaysia, Taiwan and India are also expected to boost growth. Concurrently, UEM Edgenta is also eyeing Indonesia as a potential market to expand its healthcare services. (The Star Online)

• KKB Engineering Bhd has obtained two contracts worth a total of RM29.0 mln for the supply of pipes, fittings and steel products. The first contract is a nine month agreement with Sinohydro Corp (M) Sdn Bhd, while the second contract is a purchase order for the annual supply and delivery of steel products from Syarikat SESCO Bhd which would last about four months. (The Edge Daily)

• Petra Energy Bhd was awarded a hookup, commissioning and topside major maintenance services contract from Petroliam Nasional Bhd (Petronas) in Sabah and Sarawak. The 15-month contract will commence from 16th August 2019 until 15th November 2020, but no contract value was provided. (The Edge Daily)

• Ahmad Zaki Resources Bhd (AZRB) has lodged with the Securities Commission Malaysia an RM535.0 mln Sukuk Murabahah Facility, which is secured against a list of securities, including a guarantee from AZRB. The facility is for a tenure of 12 years and the proceeds will advanced to AZRB for Shariah-compliant general working capital requirements and corporate purposes of the group. (The Star Online)  

Source: Mplus Research - 5 Sept 2019