Still Sideway Bias

• The FBM KLCI struggled to remain above the breakeven level, weighed down by weaker crude oil prices and thinner traded volumes. The lower liners also closed with minor losses, while on the broader market, only five-of-twelve subsectors closed positively – led by the Technology sector.

• Market breadth turned negative on Wednesday as decliners overtook the winners a ratio of 510-to-382 stocks. Traded volumes, meanwhile, pared 27.4% to 1.98 bln shares as investors adopt a wait-and-see approach ahead of the U.S. Federal Reserve’s monetary decision.

• Major index decliners were Nestle (-50.0 sen), PPB Group (-30.0 sen), Kuala Lumpur Kepong (-22.0 sen), Hong Leong Financial Group (-8.0 sen) and Petronas Chemicals (-8.0 sen). Other nonperforming stocks were Petron Malaysia (-14.0 sen), UMS Neiken (-5.5 sen), PMB Technology (-5.0 sen), Spritzer (-5.0 sen) and Unisem (-5.0 sen).

• On a more positive note, semiconrelated counters like Malaysian Pacific Industries (+35.0 sen) and Pentamaster (+16.0 sen) beat the broader market constituents, followed by Dufu (+16.0 sen), Hong Leong Industries (+16.0 sen) and Aeon Credit (+10.0 sen). Banking heavyweights like RHB Bank (+7.0 sen) and Hong Leong Bank (+6.0 sen) bolstered the key-index, alongside Malaysia Airports (+27.0 sen), Digi (+6.0 sen) and IHH Healthcare (+6.0 sen).

• Leading regional blue-chip indices finished mostly on the downside as investors monitor global central banks for signs of further easing amid their slowing economies. The Nikkei and the Hang Seng Index fell 0.2% and 0.1% respectively, albeit the Shanghai Composite (+0.3%) ended slightly higher, while ASEAN markets ended mostly lower.

• Wall Street was lackluster as the Dow (+0.1%) and the S&P 500 (+0.03%) hovered near the flat-line, lifted by lastminute buying support, while the Nasdaq (-0.1%) slipped into the red with a minor loss. This comes on expectations that the U.S. Federal Reserve could potentially hold off further easing after its latest interest rate cut, disappointing dovish investors.

• Key European benchmark indices - the FTSE (+0.1%), the DAX (+0.1%) and the CAC (+0.1%) moved incrementally higher on Wednesday, capped by the increasing U.S.-Iran tensions ahead of the U.S. Federal Reserve’s latest policy decision.

THE DAY AHEAD

• Stocks retreated as expected, in tandem with the pullback in oil prices. However, it would appear that the broad market conditions are still iffy, unable to shake off the generally indifferent market conditions as both market breadth and depth remains insipid – highlighted by the still thin volumes as there are fewer compelling buys.

• Consequently, we think that the mostly indifferent market trend is likely to persist, even after the U.S. Federal Reserve has reduced interest rates for the second time this year, which was widely anticipated. More importantly, there continues to be a lack of catalysts and the subsequent interest in Malaysian stocks that will continue to hold back the performance of Bursa Malaysia stocks over the near term.

• Therefore, we expect the key index to hover within a tight trading range of between the 1,590 and 1,610 levels over the near term. The other support and resistances are at the 1,580 and 1,600 points respectively.

• The lower liners and broader market shares are also headed nowhere amid the still thin market following that looks to prolong. As it is, sentiments are still cautious and the lack of direction will keep many retail players on the sidelines for longer, in our opinion.

COMPANY BRIEF

• AirAsia Group Bhd co-founder and Group Chief Executive Officer (CEO), Tan Sri Tony Fernandes is to step down from all his positions, except in AirAsia Group and AirAsia X Bhd. The decision was taken to move up the next generation of AirAsia leaders to the forefront.

• Last month, AirAsia announced a leadership reorganisation in support of its transformation into a travel and financial platform company, and build airasia.com into a lifestyle brand. The reorganisation exercise includes Aireen Omar who has been appointed AirAsia Group President (RedBeat Ventures) and will head up the corporate venture capital arm. (Bernama)

• MNC Wireless Bhd, which saw tycoon T Ananda Krishnan's nephew, Robbie Hari Krishnan Tatparanandam join the board of directors last week, has teamed up with New Zealand-based production house Monfils Pictures Ltd to diversify its digital technology and mobile solutions businesses to include producing films.

• MNC Wireless and Monfils have commenced discussions and negotiations on the details of the JV and terms of collaboration, which involve capital investment and intellectual property rights and is expected to take up to six months to finalise.

• Most recently, MNC Wireless had inked an MoU with Urban Setup Sdn Bhd to develop a mobile gold retail platform in Malaysia. The platform, which is slated to be launched by year end, will allow consumers to buy physical gold via a new mobile application with a minimum fraction value of one sen. (The Edge Daily)

• The deadline of YTL Corporation Bhd's privatisation offer for YTL Land & Development Bhd has been extended again to 7th October 2019, from 20th September 2019. YTL Land said that this will be the final extension for the offer's closing date. (The Edge Daily)

• Atrium Real Estate Investment Trust (REIT) is establishing an unrated Medium Term Notes (MTN) programme of up to RM999 mln in nominal value with tenure of 30 years from the date of the first issuance. Proceeds raised will be utilised to finance the purchase of a factory, office buildings, and warehouse in Penang. (The Edge Daily)

• Perak Transit Bhd plans to raise up to RM500.0 mln by establishing a sukuk murabahah programme to refinance the group’s bank borrowings, capital expenditure and working capital requirements.

• The programme will have a tenure of 15 years from the date of the first issuance of the sukuk. United Overseas Bank (Malaysia) Bhd is the sole principal adviser, lead arranger, lead manager, and facility agent for the programme. (The Edge Daily)

• OSK Loan Ventures Sdn Bhd, a whollyowned subsidiary of OSK Ventures International Bhd, has been granted a money lending licence by the Ministry of Housing and Local Government under the Moneylenders Act 1951 and Moneylenders (Control and Licensing) Regulations 2003, to undertake money lending activities and to provide loans. (The Edge Daily)

• Supermax Corp Bhd has announced a share dividend on the basis of one treasury unit-for-every 65 existing shares in the glove manufacturer. The proposed final dividend for financial year ended 30th June 2019. (The Edge Daily)

Source: Mplus Research - 19 Sept 2019