May Seen Quick Profit Taking

• The FBM KLCI (+0.4%) started off the quarter on a solid note, mirroring the positive sentiment across its regional peers after lingering mostly in the positive territory on Tuesday. The positive sentiment spill over to the broader market – the FBM Small Cap (+0.8%), FBM Fledgling (+0.3%) and FBM ACE (+0.8%) all rose, while the broader market finished mixed with the technology sector (+1.6%) outperforming its peers.

• Market breadth turned positive with losers outmuscling the winners on a ratio of 438-to-297 stocks. Traded volumes, however, fell 3.3% to 1.80 bln shares as the lack of fresh buying catalyst deterred investors from piling into Malaysian equities.

• Petronas Gas (+12.0 sen) anchored the local bourse winners list, followed by KLK (+10.0 sen), Sime Darby Plantations (+10.0 sen), MISC (+9.0 sen) and Maybank (+8.0 sen). Key winners on the broader market were Aeon Credit (+32.0 sen), Heineken (+24.0 sen), Vitrox (+23.0 sen) and Panasonic (+20.0 sen). Prolexus jumped 11.0 sen after delivering a strong set of quarterly earnings.

• In contrast, notable decliners on the broader market were Manulife (-13.0 sen), Fraser & Neave (-12.0 sen), Chin Well (-11.0 sen), UEM Edgenta (-11.0 sen) and Kluang Rubber (-10.0 sen). Meanwhile, Nestle (-30.0 sen), Public Bank (-8.0 sen), Maxis (-5.0 sen), Hartalega (-4.0 sen) and Petronas Chemicals (-3.0 sen) slipped on the FBM KLCI.

• Japanese equities rebounded as the Nikkei rose 0.6% the after government increased the sales tax by 2% to 10% to cover rising health costs and national debt. Both the Shanghai Composite and Hang Seng Index were closed for the National Day public holiday ASEAN stockmarkets, meanwhile, finished mostly higher on Tuesday.

• Wall Street – the Dow (-1.3%), S&P 500 (- 1.2%) and the Nasdaq (-1.1%) took a beating after U.S. manufacturing activity fell to its lowest point in more than ten years amid the prolonged U.S.-China trade conflicts.

• Earlier, European markets were also painted red as renewed concerns of slowing global growth weighed on investors’ sentiment. The DAX and the CAC were amongst the worst performers, closing down by 1.3% and 1.4% respectively. Meanwhile, the FTSE also lost 0.7%, albeit losses were capped by the weaker Pound.

The Day Ahead

• Even with the key index managing to break the downward spell, overall market conditions are likely to stay indifferent and we see yesterday’s mild gains as more of bargain hunting activities and further buying interest is likely to stay muted.

• Looking ahead, it remains to be seen if the upsides can be preserved as the release of weak U.S. economic data could point to more difficulties for the global economy as the trade war effects bites. Therefore, we think that yesterday’s gains could give way to quick profit taking activities to leave the key index is a state of flux again.

• Still, we think that any selling could be limited as market following has been thin of late and the selling may be benign for now. Hence, we think that there should be some support around the 1,582 and 1,585 levels but it the selling is more pronounced, then the 1,580 level will come into play. The resistances, meanwhile, are at the 1,590-1,600 points levels.

• We also think that the lower liners and broader market shares could retreat as we see follow through buying interest likely to stay on the thin side, due in part to the still cautious market undertone.

COMPANY BRIEF

• Tadmax Resources Bhd is buying 3.2-ac. land located near the Cheras-Kajang Expressway from Syarikat Perumahan Pegawai Kerajaan Sdn Bhd (SPPK) for RM36.7 mln. The leasehold land has been designated for commercial use with approval from Kuala Lumpur City Hall for the development of two blocks of serviced apartments. The deal valued the land at RM200 psf was won via a closed tender exercise. SPPK is a subsidiary of SP Setia Bhd. (The Star Online)
   
• KNM Group Bhd's unit, KNM Process Systems Sdn Bhd has secured two contracts worth RM55.6 mln from SK Engineering & Construction Co., Ltd for the supply of columns for its oil and gas operations. The columns must be delivered no later than 24th March 2021. (The Star Online)

• Straits Inter Logistics Bhd's subsidiary will provide bunkering services to Lumut Maritime Terminal Sdn Bhd (LMTSB) in Perak under a one-year contract. Straits 55.0% owned Tumpuan Megah Development Sdn Bhd had signed an agreement to provide the services with effect on the same day.

• LMTSB owns and operates Lumut Port at Kampung Acheh. Under the agreement, Tumpuan Megah has the exclusive right to operate, manage and provide the services located at or within the port.(The Star Online)

• MGB Bhd has bagged a RM53.0 mln contract to build a flyover in Bandar Saujana Putra, Selangor. The contract was awarded by Seribu Baiduri Sdn Bhd, which is a subsidiary of LBS Bina Group Bhd — the major shareholder of MGB. (The Edge Daily)

• Bioalpha Holdings Bhd has strengthened its foothold in China with the launch of seven new functional food products produced on original design manufacturing basis for partner Jinrui Yandetang Co Ltd. Bioalpha aims to receive more orders in the near future, given Jinrui’s extensive network reach of more than 50,000 distributors in China. (The Edge Daily)

• Sapura Energy Bhd has appointed Datuk Mohammad Azlan Abdullah as its new Non-Independent Director effective 1st October 2019. Currently he is the Group Chief Executive Officer (CEO) of Projek Lintasan Kota Holdings Sdn Bhd (Prolintas) and he was the CEO of The New Straits Times Press (Malaysia) Bhd previously. (The Edge Daily)

• Revenue Group Bhd has teamed up with TNG Digital Sdn Bhd to enable the usage of Touch 'n Go eWallet on the Alibabaowned Taobao and Tmall marketplaces. The strategic collaboration with TNG Digital is expected to enhance Revenue's bottom line, going forward as it is set to gain from the electronic transaction processing fees. (The Edge Daily)  

Source: Mplus Research - 2 Oct 2019