Still Looking For A New Direction

• The FBM KLCI slipped in the final trading hour, weighed down losses in selected key-index constituents and weaker energy prices. All the lower liners continued their winning run - led by the FBM ACE (+0.5%), while the broader market closed mixed.

• Market breadth remained positive as advancers maintained the upper hand against the losers on a ratio of 429-to- 362 stocks, while traded volumes tanked 18.6% to 1.89 bln shares, as investors retreated to the sidelines ahead of major monetary decisions by key central banks.

• Petronas Dagangan (-78.0 sen), Nestle (- 70.0 sen), Kuala Lumpur Kepong (-14.0 sen), Tenaga Nasional (-14.0 sen) and Hap Seng Consolidated (-12.0 sen) topped the laggards list, while other broader market decliners were Dutch Lady (-RM1.40), Rapid Synergy (-25.0 sen), Panasonic Manufacturing (-22.0 sen), Scientex (-18.0 sen) and UMW Holdings (-14.0 sen).

• On the other hand, broader market gainers were BAT (+RM1.00), Chin Teck Plantations (+47.0 sen), Pentamaster (+18.0 sen), Aeon Credit (+16.0 sen) and LPI Capital (+16.0 sen). Key-index winners, meanwhile, constitute Petronas Chemicals (+28.0 sen), Malaysian Airports (+14.0 sen), Digi (+11.0 sen), Petronas Gas (+10.0 sen) and Hong Leong Bank (+8.0 sen).

• Major Asian indices were mostly upbeat on trade optimisms following President Donald Trump’s decision to delay increasing tariffs on certain Chinese imports to 15th October, from 1st October 2019 initially. The Nikkei remained on its upward trajectory; closing higher for the sixth-straight session, while the Shanghai Composite added 0.8% to 3,031.2 points. The Hang Seng index (-0.3%), however, closed slightly lower on the back of minor profittaking activities. The majority of ASEAN equities also eked-out gains on Thursday.

• U.S. equities were mostly positive on Thursday, driven by ECB’s fresh stimulus measures. The Dow (+0.2%) pushed higher for the seventh consecutive sessions of gains, despite coming off its intraday high. On the broader market, the S&P 500 added 0.3%, alongside the Nasdaq (+0.3%) as both indices ended close to its previous record highs.

• U.K. equities eke- out gains as the FTSE (+0.1%) clawed back earlier losses and closed marginally in the positive territory, supported by gains in mining stocks amid the easing U.S.-China trade tensions. Similarly, the DAX and the CAC also ended 0.4% higher, following renewed quantitative easing packages by the ECB, albeit capped by weaker-than-expected Eurozone manufacturing data.

THE DAY AHEAD

• Once again, there was little followthrough interest as the key index succumbed to quick profit taking activities to leave the key index in a state of flux again. This leaves us to believe that much stronger impetuses are required to ensure a sustainable uptrend as the recent gains have seen little support and this is resulting in the key index lingering within a tight band of between the 1,590 and 1,610 levels.

• Although we think that the key index could regain some of its lost ground to end the week, we still think the market’s undercurrent remains indifferent and this could also mean that any near term upsides will be limited. As it is, most market players are still unsure of the market’s direction and this is keeping many players on the sidelines and the overall market participation on the thin side. Therefore, the near term gains could still be limited to the upper part of its range of 1,610 points, while the near term support remains at the 1,590 level.

• Unlike the key index stocks, the lower liners and broader market shares are showing some signs of revival and we see this trend sustaining over the near term as they look to build up momentum. However, market participation is still thin and this may again limit the upside potential.

COMPANY BRIEF

• Maxis Bhd has teamed up with technology leader, Cisco to jointly deliver a wide range of market leading technologies for businesses in Malaysia. The first of many planned joint offerings from this partnership for the Malaysian market was the managed software-defined wide area network (SD-WAN) solution for businesses. (The Star Online)

• Astro Malaysia Holdings Bhd’s 2QFY20 net profit soared 921.4% Y.o.Y to RM169.3 mln, on the back of lower content cost and cutbacks in its marketing and promotion expenses. Revenue for the quarter, however, slid 12.7% Y.o.Y to RM1.24 bln, on lower subscription revenue, licensing income, advertising revenue and merchandise sales.

• For 1HFY20, cumulative net profit jumped 80.6% Y.o.Y to RM345.5 mln. Revenue for the period, however, declined 9.4% Y.o.Y to RM2.47 bln. A second interim dividend of two sen a share, payable on 11th October 2019, was declared. (The Edge Daily)

• Sunway Bhd’s indirectly-owned joint venture company, Tianjin Eco-City Sunway Property Development Co Ltd has submitted a winning bid of RMB438.0 mln (about RM257.8 mln) to acquire a parcel of land in Tianjin, China.

• The group plans to embark on a residential development on the land which measures about 6.9 ac. — to be named Sunway Garden Phase 3 and consisting of seven blocks of condominiums. The development is expected to start in May 2020 and targeted to be completed by May 2023. (The Edge Daily)

• Straits Inter Logistics Bhd has signed a Memorandum of Agreement to acquire a 13-year-old oil tanker named Poseidon for a total of US$4.8 mln or RM20.5 mln cash from Hibiscus Fuels Ltd.

• The proposed acquisition is in line with the group’s strategy to enlarge its asset base, in view of the higher business volume and the expansion phase it currently experiences. (The Edge Daily)

• Destini Bhd has proposed a private placement to raise approximately RM49.7 mln in funds for the repayment of bank borrowings and working capital purposes. The group intends to issue up to 231.1 mln shares for the placement exercise, representing up to 20.0% of the total number of issued shares in Destini.

• Based on an indicative issue price of 21.5 sen per placement share, the exercise is expected to raise RM49.7 mln in proceeds, of which RM21.0 mln will be used to repay bank borrowings. Meanwhile, RM22.0 mln will go towards funding its existing projects, RM5.0 mln for new projects, while RM1.4 mln has been earmarked for general requirements. (The Edge Daily)

Source: Mplus Research - 13 Sept 2019