The FBM KLCI (+0.2%) managed to recover all its intraday losses, boosted by the eleventh hour bargain hunting in selected index heavyweights. Consequently, the key index snapped a three-day losing streak yesterday. The lower liners also finished mostly higher as the FBM Fledgling and FBM ACE gained 0.1% and 0.3% respectively, while the broader market closed mostly in the red.

• Market breadth remained negative as decliners outnumbered advancers on a ratio of 452-to-411 stocks. Traded volumes, however, rose 27.6% to 3.29 bln shares as profit taking activities amongst the lower liners escalated.

• Leading the FBM KLCI winners list were Hong Leong Financial Group (+70.0 sen), Petronas Gas (+14.0 sen), KLK (+12.0 sen), Nestle (+1.0 sen) and Dialog (+7.0 sen). Notable gainers on the broader market include Carlsberg (+50.0 sen), KESM Industries (+35.0 sen), Heineken (+32.0 sen), Syarikat Takaful (+21.0 sen) and BAT (+18.0 sen).

• On the other side of the trade, broader market losers were Vitrox (-19.0 sen), Eng Kah Corporation (-11.5 sen), Bumi Armada (-8.0 sen), Mulpha International (-8.0 sen) and Innoprise Plantations (- 7.0 sen). In the meantime, Hong Leong Bank (-10.0 sen), Sime Darby Plantations (-7.0 sen), MISC (-6.0 sen), RHB Bank (-5.0 sen) and CIMB (-2.0 sen) slipped on the FBM KLCI.

• Asian benchmark indices remain upbeat as the Hang Seng Index and Shanghai Composite rose 0.2% and 0.5% respectively, taking cue from the positive sentiment on Wall Street overnight. Japanese stockmarkets were closed for the Enthronement ceremony public holiday. ASEAN equities, meanwhile, closed mostly higher yesterday.

• U.S. stockmarkets turned lower after erasing all their intraday gains as the Dow fell 0.2% on the weaker-thanexpected corporate earnings from McDonald’s and Travelers. On the broader market, the S&P 500 declined 0.7%, dragged down by the weakness in technology sector (-1.4%), while the Nasdaq slipped 0.7%.

• Earlier, major European equities – the FTSE (+0.7%), CAC (+0.2%) and DAX (+0.1%), all extended their gains as U.K. lawmakers debated Prime Minister Boris Johnson’s Withdrawal Agreement Bill. Gains were also in line with the positive sentiment across Asian equities amid the positive developments over Sino-U.S. trade negotiation progress.

The Day Ahead

• FBM KLCI listed stocks continue to stay rangebound yesterday, as expected, given that there are still few compelling leads for institutional players to follow. Most of the action, however, was on the lower liners and broader market shares as they continue to attract rotational play from retail players.

• Judging by the current market conditions, we see the indifferent trend sustaining among FBM KLCI listed stocks as activity on them remains largely tepid, despite the bouts of foreign buying over the past few sessions. As it is, most institutional players are on adopting a wait-and-see attitude for more impetuses on the index heavyweights before deciding on their next course of action. Therefore, we maintain our view that the key index will linger within the 1,566 and 1,576 levels over the near term, with the slight downward bias still prevalent. The other support and resistance levels are at 1,562 and 1,580 respectively.

• The lower liners and broader market shares will continue to attract substantive retail following amid the ongoing rotational activities. However, we also think that gains will be measured due to the generally overbought conditions that could prompt increased profit taking activities.
  
  COMPANY BRIEF

• TDM Bhd’s unit in Indonesia has been sanctioned by the government and ordered to stop all plantation activities at some 900 h.a. of its plantation area in Kalimantan, which has been burnt recently. The sanction will last for three years.

• Under the order, the group is also ordered to complete fire prevention facilities and infrastructure within 12 months from the date the sanction takes effect. The affected area is said to make up about 7.0% of TDM's total 12,645 ha. of planted oil palm land in Kalimantan. (The Edge Daily)

• Petron Malaysia Refining & Marketing Bhd and Hengyuan Refining Co Bhd have confirmed a news report stating that their crude oil vessels are unable to discharge crude oil at two refineries owned by them in Port Dickson. The incident was attributed to a technical problem with their single buoy mooring facilities and operations are expected to return to normal by early November. (The Star Online)

• Revenue Group Bhd is planning a two-forthree bonus issue of up to 230.0 mln bonus shares. (The Edge Daily)

• Parkson Holdings Bhd’s 55.0%-owned Hong Kong-listed subsidiary has obtained loans totalling HK$3.9 bln (RM2.08 bln) for refinancing and general working capital needs. The loans were from a syndicate of banks for a three-year term; with specific performance obligation on certain controlling shareholders of PRG.

• Parkson Holdings Chairman and Managing director Tan Sri Cheng Heng Jem and his wife Puan Sri Chan Chau Ha @ Chan Chow Har are deemed to have an interest in the 55.0% stake in PRG held by Parkson. (The Edge Daily)

• IFCA MSC Bhd has signed a Memorandum of Understanding (MoU) with Huawei Services (Hong Kong) to collaborate in a strategic partnership programme to explore project initiatives in the areas of DevOps, cloud AI, big data and knowledge sharing on innovative technology. (The Star Online)

• Multi Sports Holdings Ltd said that Bursa Malaysia has rejected its application to delay the issuance of its 2019 annual report for the period from 31st October to 31st December 2019. The group attributed the delay to the resignation of its former auditors, Messrs RT LLP.

• Subsequently, Multi Sports is at risk of having its share trade suspended next month or subsequently delisted, should the company fail to submit its 2019 annual report within the stipulated time frame. (The Edge Daily)

• T7 Global Bhd has clinched an umbrella contract by Petronas Carigali Sdn Bhd to provide integrated well services for intervention, workover, and abandonment for petroleum arrangement contractors (PACs). The five-year contract will run from 20th September 2019 until 19th September 2024. In addition, the contract value shall be on work order request basis, at the full discretion of the PACs. (The Star Online)  

Source: Mplus Research - 23 Oct 2019