Going Nowhere As Sentiments Stay Dour

• The FBM KLCI (-0.04%) extended its losses after trading mostly in the negative territory, bucking the mostly positive performance across its regional peers yesterday. The lower liners also closed mostly lower as the FBM Fledgling and FBM ACE declined 0.1% and 0.3% respectively, while the broader market finished mixed.

• Market breadth remained negative as losers outpaced advancers on a ratio of 425-to-349 stocks. Traded volumes declined 2.7% to 1.98 bln shares amid the negative market sentiments.

• Nestle (-10.0 sen) led the local bourse decliners list, followed by Petronas Chemicals (-8.0 sen), Maybank (-7.0 sen), Hong Leong Financial Group (-6.0 sen) and Genting (-5.0 sen). Among the biggest decliners on the broader market were Fraser & Neave (-32.0 sen), Concrete Engineering Products Company (-15.0 sen), Panasonic (-14.0 sen), MPI (-13.0 sen) and Heng Yuan (- 10.0 sen).

• On the flipside, notable gainers on the broader market include consumer products stocks like Dutch Lady (+22.0 sen), Heineken (+20.0 sen) and PRG Holdings (+15.0 sen), while Vitrox and Pentamaster gained 21.0 sen and 13.0 sen respectively. Key winners on the FBM KLCI were Sime Darby Plantations (+15.0 sen), Petronas Dagangan (+12.0 sen), Petronas Gas (+6.0 sen), Press Metal (+5.0 sen) and Ambank (+5.0 sen).

• Asian benchmark indices finished mostly higher as the Nikkei (+0.1%) advanced on the weaker Japanese Yen against the Greenback. The Hang Seng Index rose 0.2%, while the Shanghai Composite added 0.3% in anticipation of positive outcome stemming from the upcoming U.S.-China trade negotiations. ASEAN stockmarkets, meanwhile, closed mostly higher on Tuesday.

• U.S. stockmarkets finished lower as the Dow declined 0.5% on news that the House of Representatives pursuing an impeachment inquiry against U.S. President Donald Trump, coupled with the latter accusing China of manipulating its currency and stealing intellectual property. On the broader market, the S&P 500 slipped 0.8%, dragged down by the energy sector (-1.6%), while the Nasdaq (- 1.5%) sank below the 8,000 psychological level.

• Earlier, major European indices – the FTSE (-0.5%), CAC (-0.04%) and DAX (- 0.3%) all reverse their intraday gains to extend their losses. The weakness was mainly due to the political uncertainty surrounding U.S. President Donald Trump that is facing impeachment inquiry for improperly pressuring the Ukrainian president to undermine former Vice President, Joe Biden.

THE DAY AHEAD

• With Malaysian stocks continuing to lose ground, the near term outlook is also likely to stay indifferent as the tepid investor interest will keep equities subdued for longer. Already, there are few positive leads for market players to follow and this will further keep most market players on the sidelines.

• The wariness will be compounded by the impeachment process against President Trump and his labelling of China as a currency manipulator could again complicate the U.S’ trade talks with the former and potentially delay an outcome to the trade war.

• With the above concerns still in play, coupled with the weakening trend among key global equity indices, the FBM KLCI’s downside risk remains and the 1,590 support will be threatened again. Below that level, the other support is at the 1,580 level, while the resistances are at the 1,600 and 1,610 levels respectively.

• We also see the lower liners and broader market shares staying subdued for longer as the insipid market conditions will also keep most retail players on the sidelines for now.

COMPANY BRIEF

• MISC Bhd is expected to co-own two newbuild LNG vessels with Mitsubishi Corp and Nippon Yusen Kabushiki Kaisha (NYK), mainly for the LNG Canada project. The vessels, which are currently being built by Hyundai Samho Heavy Industries, will be delivered in 2021 and will serve Mitsubishi on an 18-year charter contract. MISC’s interest in the total contract value is estimated at US$201.6 mln. (The Star Online)

• FGV Holdings Bhd has reported that it was unaware of a plan by tycoon Tan Sri Syed Mokhtar Al-Bukhary to buy a 20.0% equity stake in the group. This comes after a newspaper article suggested there is a plan for Tan Sri Syed Mokhtar to eventually take control of FGV. (The Edge Daily)

• George Kent (Malaysia) Bhd's 2QFY20 net profit more than halved to RM11.1 mln, from RM24.6 mln in the last corresponding year, dragged down by weaker performance across all segments, while revenue fell 13.5% Y.o.Y to RM97.7 mln, from RM112.9 mln earlier.

• For the cumulative 1HFY20, net profit also narrowed by 46.7% Y.o.Y to RM24.6 mln, from RM46.1 mln a year ago, while revenue weakened by 15.1% Y.o.Y to RM180.5 mln, from RM212.7 mln in 1HFY19. Even so, the group declared an interim dividend of 1.5 sen per share, payable on 31st October 2019. (The Star Online)

• Chuan Huat Resources Bhd has sold off its entire 6.0% indirect stake in lossmaking Amalgamated Industrial Steel Bhd (AISB) to Telaxis Sdn Bhd for RM3.2 mln or 38.0 sen per share. The divestment will reap a gain of RM1.2 mln that will be used for other potential future investments. (The Edge Daily)

• GETS Global Bhd has proposed to sell 100 units of high specification buses to Gunung Capital Bhd, amounting to about RM50.0 mln. Both parties have signed a Memorandum of Understanding (MoU) to discuss and negotiate terms of the agreement for the proposed sale. (The Star Online)

• Petronas Dagangan Bhd (PetDag) will continue to pay dividends to shareholders as the group's earnings growth remains positive. However, the group thinks that PetDag's non-fuel income via the group's Mesra convenience stores is still below potential and needs to be improved, inline with its plans to upgrade its retail stores.

• Subsequently, PetDag is looking to increase its non-fuel segment's earnings contribution to 30.0% of total earnings, from about 17.0% currently. (The Edge Daily)

• Malaysian Rating Corp Bhd (MARC) has downgraded Titijaya Land Bhd’s RM150.0 mln Islamic commercial papers (ICPs) to MARC-2IS from MARC-1IS on increased concerns over the property developer's business and credit profile, amid the prevailing weak property market. MARC said the group’s liquidity is likely to be pressured to fund its development projects against a backdrop of weakening property sales and rising inventory levels.

• The outstanding notes under the programme stood at RM50.0 mln as at end-June. (The Edge Daily)

• Kinsteel Bhd is planning to regularise its operations as a going concern and has proposed a 70.0% share capital reduction and a three-to-one share consolidation, and to raise up to RM46.6 mln via the placement of new shares to selected investors, together with a rights issue to existing shareholders. The proposal will include free warrants.

• The company has also proposed the disposal of five parcels of industrial land with buildings erected thereon and equipment and machineries for RM140.0 mln. (The Edge Daily)

• London Biscuits Bhd has been slapped with a lawsuit by Kuwait Finance House (Malaysia) Bhd (KFH) for RM5.1 mln in outstanding debt. To recap, the amount was deemed defaulted after a payment due on 23th August was missed. (The Edge Daily)

• Publishers Pelangi Publishing Group Bhd and Sasbadi Holdings Bhd have clinched contracts worth a combined RM1.2 mln from the Ministry of Education (MoE) to translate, print and supply chemistry and additional mathematics textbook under the dual language programme for Form 4 students. Pelangi’s contract value stands at RM716,130, which is valid for 36 months, while Sasbadi’s is worth RM444,540, and will be valid for a year. (The Edge Daily)

Source: Mplus Research - 25 Sept 2019