Mild Recovery In Sight

• The eleventh hour buying support in selected index heavyweights powered the FBM KLCI to close in the positive territory as the key index rose 0.3%, snapping a three-day losing streak yesterday. The lower liners – the FBM Small Cap (+0.3%), FBM Fledgling (+0.1%) and FBM ACE (+0.2%), all advanced ended in the red, while the broader market closed mixed.

• Market breadth remained negative decliners outpaced the advancers on a ratio of 471-to-339 stocks. Traded volumes fell 4.1% to 2.54 bln shares amid the negative market sentiment.

• Key winners on the local bourse were Public Bank (+42.0 sen), Press Metal (+20.0 sen), Top Glove (+14.0 sen), Hap Seng Consolidated (+12.0 sen) and Maxis (+12.0 sen). Significant advancers on the broader market were Vitrox (+47.0 sen), Malayan Cement (+28.0 sen), Panasonic (+26.0 sen), Tasek Corporation (+19.0 sen). TH Heavy rose 2.0 sen after received the green light from Petronas to supply certain products and services to oil and gas companies in Malaysia.

• Amongst the biggest losers on the broader market include consumer products stocks like Dutch Lady (-46.0 sen), BAT (-20.0 sen), Carlsberg (-10.0 sen) and Fraser & Neave (-10.0 sen), while Batu Kawan declined 30.0 sen. Major decliners on the FBM KLCI were Nestle (-20.0 sen), KLK (-10.0 sen), Petronas Dagangan (-6.0 sen), Petronas Chemicals (-6.0 sen) and PBB Group (- 6.0 sen).

• Asia benchmark indices were in the red following U.S. President Donald Trump comments the existing tariffs in Chinese goods will remain in place in 2020. The Nikkei, Hang Seng and Shanghai Composite, all shed 0.5%, while ASEAN stockmarkets were painted in red yesterday.

• U.S. stockmarkets rebounded as the Dow gained 0.3% after U.S. President Donald Trump signed the first phase of trade deal with China, potentially marking the first step towards the end of the trade war between the two economic powerhouses. On the broader market, the S&P 500 rose 0.2%, while Nasdaq finished 0.1% higher.

• European benchmark indices, however, finished mostly lower as the DAX and CAC fell 0.2% and 0.1% respectively on concern over the on-going tariffs for Chinese exports will continue to weigh on economic sentiment for the remainder of the year. The FTSE, however, gained 0.3% after the December’s inflation rate rose only 1.3% Y.o.Y in December 2019 – signaling potential interest rate cut by the Bank of England.

The Day Ahead

• The negative market sentiment was largely dictated by the unresolved SinoU.S. trade war. Although the “Phase One” of the trade agreement took place, a basket of Chinese goods are still subjected to tariffs that would likely to stay till the U.S. Presidential election. With no signs of progress beyond the aforementioned trade deal, market sentiment has largely turned dour again.

• Surprisingly, the FBM KLCI managed to outperform its’ regional peers yesterday. Therefore, we expect the recover, led by bargain hunting activities stemmed from the trade deal between U.S. & China kay shore the key index potentially re-testing the 1,590 resistance level as the local bourse may continue to build a base around the 1,600 psychological level. In the interim, the 1,565 will serve as the immediate support level, followed by the 1,550 level.

• The lower liners and broader market shares managed to inched higher yesterday. Therefore, the rotational play may linger for the time being, possibly towards the Lunar New Year.

COMPANY BRIEF

• Bermaz Auto Bhd has launched its new Mazda CX-30, a new compact crossover SUV, to cater to the rising popularity and demand for SUVs in the domestic market. (The Edge Daily)

• The Roundtable on Sustainable Palm Oil (RSPO)'s complaints panel has halted the principles and criteria (P&C) certification processes for all of FGV Holdings Bhd's uncertified units, while re-imposing its suspension of FGV's mill unit Kilang Sawit Serting after finding the results of six audit reports on FGV’s units to be unsatisfactory.

• Consequently, the panel has moved to resuspend Kilang Sawit Serting's P&C certificate and halted all certification processes on FGV's uncertified units, effective 13th January, 2020.

• Moving forward, the group plans to appeal RSPO's decision, in view of FGV’s progress updates and action plan for its foreign worker employment process. (The Star Online)

• Axiata Group Bhd's Celcom Axiata Bhd is planning to grow its non-consumer mobile business revenue contribution to between 15.0% and 20.0% of total revenue in the next two to three years from about 10.0% now. (The Edge Daily)
• Separately, Celcom and Maxis Bhd have successfully conducted the first 5G Multi Operator Core Network (MOCN) trial in Southeast Asia, recording a peak speed exceeding 1.1gbps in outdoor environments.

• The trial was held December last year in Langkawi, after a Memorandum of Understanding (MoU) was signed between Celcom and Maxis, to explore Malaysia’s first active 5G Radio Active Network (RAN) sharing.

• The trial locations were a Maxis 5G site at Seaview Hotel in Kuah and a Celcom 5G site at The Westin Langkawi Resort & Spa, which allowed users of each telco at both locations to access the 5G network hosted by the two companies, as if they are on their home network. (The Edge Daily)

• DiGi.Com Bhd's Digi Telecommunications Sdn Bhd has collaborated with Malaysia Airports Holdings Bhd (MAHB) and Panorama Langkawi to initiate Malaysia’s first real-time virtual tourism experience, powered by 5G, at the Langkawi International Airport (LGK).

• A cable car gondola and a virtual reality (VR) experiential zone set up at the LGK would allow visitors to enjoy a 360- degree view of Gunung Machinchang, live-streamed from 20km away via a camera mounted at the Langkawi SkyCab middle station, where the world’s steepest cable car ride takes one 708 metres above sea level.

• The 5G virtual tourism experience, which is open to the public until March 2020, is expected to provide a new immersive and integrated travel experience for tourists and improve the tourism industry in the nation. (The Edge Daily)

• Cuscapi Bhd is working with Indonesianbased PT Cartenz Inti Utama (PT CIU) for the supply and implementation of 20,000 point-of-sale (POS) system units in Indonesia.

• The group has inked a MoU with the latter to be strategic partners for the roll-out of F&B sector POS projects in Indonesia and the partnership is expected to extend Cuscapi’s footprint and increase its POS hardware installed user base. (The Star Online)

• OSK Holdings Bhd and its Japanese partner Marubeni Corp have been unsuccessful in their joint-bid for a large scale solar photovoltaic plant in Peninsular Malaysia under the Government’s third cycle of the scheme (LSS3). The group had received the outcome letter on 6th January, 2020 and thus, is terminating the JDA-TS (Joint Development Agreement Term Sheet) with immediate effect. (The Edge Daily)

• Securemetric Bhd has acquired a 5.0% equity stake in Indonesian digital startup PrivyID for a cash consideration of 20.3 bln Indonesian rupiah (RM6.0 mln). The group has inked a conditional share subscription agreement with PT Privy Identitas Digital on 15th January, 2020.

• PrivyID is Indonesia’s first nongovernment institution certified certificate authority (CA), as well as the first private company in Indonesia that was granted access to the National Identification database. (The Star Online)

• The High Court has granted a windingup order against London Biscuits Bhd's wholly-owned subsidiary Kinos Food Industries (M) Sdn Bhd for not being able to pay an RM5.0 mln outstanding sum owed to Desa Potensi Sdn Bhd.

• Subsequently, Ling Sie Kiong of Messrs HC Advisory Sdn Bhd has been appointed as the liquidator of Kinos following the court order on 14th January, 2020. (The Edge Daily)

• Pestech International Bhd is buying a 94.0% equity stake in Sustainable Ventures (Cambodia) Co Ltd (GSV), in a bid to expand its business in Cambodia.

• The group will pay about US$4.0 mln (about RM16.0 mln) for the stake in Sustainable Ventures, which will give Pestech the super-majority rights over the development of a 20-year concession of a 20MW AC large-scale solar farm project in Bavet City, in the Svay Rieng Province of Cambodia. (The Star Online)  

Source: Mplus Research - 16 Jan 2020