Consolidation Taking Shape

• The FBM KLCI (-0.3%) ended the week on a soft footing as quick profit taking activities in selected index heavyweights emerged. The local bourse subsequently snapped a five consecutive weeks of rally, falling 1.2% W.o.W. Amid the mixed broader market, the lower liners, however, managed to cling onto their gains as the FBM Small Cap and FBM Fledgling added 0.1% and 0.2% respectively.

• Market breadth stayed positive advancers pipped the decliners on a ratio of 401-to-398 stocks. Traded volumes, however, edged 3.3% lower with 2.74 bln shares exchanging hands as investors turned cautious on the recent volatility.

• Half of key-index components fell, dragged down by Petronas-related shares like Petronas Dagangan (-28.0 sen), Petronas Gas (-16.0 sen) and Petronas Chemicals (-7.0 sen), while Hong Leong Financial Group and Axiata shed 16.0 sen and 8.0 sen respectively. Meanwhile, Allianz (-38.0 sen), Batu Kawan (-18.0 sen), LPI Capital (-18.0 sen), Carlsberg (-12.0 sen) and Dutch Lady (-8.0 sen) slipped on the broader market.

• Notable gainers on, broader market were technology shares like KESM Industries (+48.0 sen), MPI (+42.0 sen), Vitrox (+29.0 sen) and Genetec (+19.0 sen), while Mega First Corporation added 30.0 sen. Key winners on the local bourse were Nestle (+50.0 sen), Malaysia Airport Holdings (+7.0 sen), RHB Bank (+6.0 sen), MISC (+5.0 sen) and Genting (+4.0 sen).

• Asia benchmark indices finished mostly higher as the Nikkei and Hang Seng Index extended their gains by 0.5% and 0.3% respectively, taking cue from the positive sentiment on Wall Street overnight. The Shanghai Composite (- 0.1%), however, took a backseat on quick profit taking activities. ASEAN stockmarkets, meanwhile, closed mostly higher on last Friday.

• U.S. stockmarkets staged a pullback from their all-time high levels as the Dow fell 0.5% on the back of the disappointing jobs data. On the broader market, both the S&P 500 and Nasdaq declined 0.3% each with the former dragged down by the financial sector (-0.8%).

• Major European equities also retreated with the FTSE, CAC and DAX falling into the negative territory in the final trading hour to close 0.1% lower each after enduring a choppy trading session. The weakness was mainly due to the fresh imposition of sanction from the U.S. against Iran.

The Day Ahead

• The FBM KLCI succumbed to quick profit taking activities following the recent dive in crude oil prices that affect the oil & gas heavyweights. The renewed weakness across global equities may also permeate to the local market as the key index looks to start the week on a dour note.

• As it is, the buying interest on Malaysian shares from the last year’s window dressing have diminished with few follow-through buying interest to sustain the recovery. Hence, this could prompt further weakness with the 1,575 level remained as the key support level. On the upside, any potential gains arising from the impending trade deal between U.S. and China may power key index to re-test the 1,600 psychological level.  For now, we expect the consolidation on the broader market to take place to allow investors digest their recent gains. Nevertheless, trading interest remain particularly strong on the technology shares.

COMPANY BRIEF

• Tropicana Corp Bhd, which is controlled by tycoon Tan Sri Danny Tan Chee Sing, is subscribing to 99.0% of the enlarged issued share capital of Cenang Laris Sdn Bhd and Valley Talent Solutions Sdn Bhd (VTS). Cenang and VTS have land and shop-lots in Gohtong Jaya in Genting, Pahang. The share subscription agreement is expected to be completed by the 1Q2020 or 2Q2020. (The Edge Daily)

• KPJ Healthcare Bhd is earmarking between RM200.0 mln and RM300.0 mln for capital expenditure (capex) in 2020 to expand its business operations. The capex will be used for the construction of a new hospital and purchase of new equipment. (The Edge Daily)

• Minetech Resources Bhd has secured a contract worth RM27.7 mln to undertake upgrading works along the Cheras Kajang Expressway for the proposed Emerald 9 Cheras development in Cheras, Selangor.

• The project was awarded by GLM Emerald Square (Cheras) Sdn Bhd and is expected to be completed by 2Q2022. (The Edge Daily)

• Nextgreen Global Bhd has announced that IHI Corp and Nomura Holdings Inc are still in the midst of carrying out the feasibility study on the development of power generation and other auxiliary facilities for Nextgreen’s Green Technology Park in Pahang (GTPP), as well as projects in Negeri Sembilan and Sarawak.

• The study includes the development of a 30-megawatt biomass power plant, alkaline recovery plant and wastewater treatment plant in GTPP.

• The group is also still in discussion on the collaboration structure with the two Japanese companies including the establishment of a joint-venture (JV) arrangement and terms of the definitive agreement.

• Consequently, the aforementioned parties have extended the Memorandum of Understanding (MoU) signed in November 2018 to explore collaboration and investment for GTPP, for another year. (The Edge Daily)

• Ajiya Bhd has decided to terminate the consortium agreement that it has signed with Xinyi Solar (M) Sdn Bhd and U-Li Solar Energy Sdn Bhd after failing to clinch the tender for the large-scale solar photovoltaic Edition 3 (LSS3). The consortium received the notice dated 6th January, 2020 from the Energy Commission stating that the bid by the consortium was unsuccessful. (The Edge Daily)

• Kerjaya Prospek Group Bhd, which is controlled by its executive Chairman Datuk Tee Eng Ho and his family with a 70.7% equity stake as at 29th March, 2019, has requested to halt the trading of its shares on 13th January, 2019, pending a material announcement. (The Star Online)  

Source: Mplus Research - 13 Jan 2020