Ending On Positive

• Once again, the FBM KLCI (+0.2%) closed in the positive note, largely thanks to the buying support in selected index heavyweights yesterday. The lower liners, however, edged mostly lower as the FBM Small Cap and FBM Fledgling fell 0.1% and 0.2% respectively, while the broader market ended mixed with the construction sector (+1.1%) taking the lead.

• Market breadth stayed negative as decliners outnumbered the advancers on a ratio of 448-to-376 stocks. Traded volumes, however, rose 2.0% to 2.60 bln shares as profit taking activities were more evident amongst the lower liners.

• Anchoring the local bourse’ winners list were Axiata (+20.0 sen), Hong Leong Bank (+10.0 sen), Petronas Dagangan (+8.0 sen), Malaysia Airport Holdings (+6.0 sen) and Press Metal (+5.0 sen). Amongst the biggest gainers on the broader market include Batu Kawan (+26.0 sen), Malayan Cement (+19.0 sen), Gamuda (+15.0 sen), Greatec (+14.0 sen) and UWC Holdings (+14.0 sen).

• In contrast, notable decliners on the broader market were consumer products stocks like BAT (-82.0 sen), Dutch Lady (-68.0 sen) and Ajinomoto (- 28.0 sen), while Syarikat Takaful and Aeon Credit shed 59.0 sen and 22.0 sen respectively. Meanwhile, Nestle (-10.0 sen), Petronas Gas (-10.0 sen), Top Glove (-9.0 sen), KLK (-8.0 sen) and PBB Group (-8.0 sen) fell on the key index.

• Asia benchmark indices closed mostly higher as the Nikkei and Hang Seng Index added 0.1% and 0.4% respectively, taking cue from the positive sentiment on Wall Street overnight after the signing ceremony of U.S.-China partial trade deal. The Shanghai Composite, however, extended its losses by 0.5% after lingering mostly in the negative territory. ASEAN stock markets, meanwhile, closed mixed on Thursday.

• U.S. stockmarkets rallied overnight as the Dow gained 0.9 after the Senate has given approval of a new trade deal between the U.S., Mexico and Canada, a series of strong corporate earnings and solid labour data. Likewise, the S&P 500 climbed 0.8% with all eleven major sectors in the green, while the Nasdaq jumped 1.1%.

• Earlier, major European indices edged mostly lower as the FTSE and DAX fell 0.4% and 0.02% respectively as the latter was dragged down by Germany's defence minister confirmation that U.S. threatened to impose a 25% tariff on European auto exports if continental heavyweights continued to back a nuclear deal with Iran. The CAC, however, rose 0.1%.

THE DAY AHEAD

• As expected, the FBM KLCI continue to build onto its’ gains, taking cue from the positive developments over U.S.-China trade pact that could potentially mark a first step to end the long standing trade war. For now, the local bourse may stage further recovery to close the week on a positive note.

• With the recovery in sight as investors bargain hunt beaten down stocks, the FBM KLCI may trend higher as the key index looks to play catch-up with the strong gains recorded across global equities last year. The sustainable mild recovery may push key index to re-test the 1,590 level, followed by the 1,600 psychological level. Meanwhile, the 1,565 remained as the support level, followed by the 1,550 level.

• The lower liners and broader market shares are expected to remain in the consolidation band as gains took a breather following the recent run-up. Nevertheless, we note that strong trading interests emerged in construction and building materials stocks.

COMPANY BRIEF

• Sime Darby Plantation Bhd‘s (SDP) unit Sime Darby Plantation Investment (Liberia) Pte Ltd has disposed its entire stake in Sime Darby Plantation (Liberia) Inc (SDP Liberia) to Mano Palm Oil Industries Ltd (MPOI).

• Under the Sale & Purchase Agreement, SDP’s entire equity in SDP Liberia was sold to MPOI for US$1 plus an earn-out payment, which will be determined by the average future crude palm oil (CPO) price and future CPO production of SDP Liberia in 2022.

• The earn-out consideration is payable in equal quarterly instalments over a period of eight years, starting from April 2023. (The Edge Daily)

• Datasonic Group Bhd has clinched a letter of extension (LoE) to supply 6.1 mln raw MyKads and MyKad consumables to the National Registration Department (NRD). The one-year LoE is valid from 1st January, 2020 to 31st December, 2020. (The Star Online)

• MISC Bhd, Samsung Heavy Industries, Lloyd's Register and MAN Energy Solutions are collaborating on a jointdevelopment project for an ammoniafuelled tanker, in a bid towards a decarbonized future.

• The collaboration is in-line with the International Maritime Organisation's 2050 Greenhouse Gas emission target, which requires commercially viable deepsea zero-emission vessels to be operational by 2030. (The Edge Daily)

• Kejuruteraan Asastera Bhd is proposing to undertake a 2-to-5 share split to increase the affordability and trading liquidity of its shares. Its issued shares will be increased to 925.6 mln shares, from 370.2 mln currently. (The Edge Daily)

• Telekom Malaysia Bhd (TM) and U Mobile Sdn Bhd is working together to explore network sharing opportunities using TM’s 5G Demonstration Project (5GDP) Langkawi network as the platform. Both parties will be exploring several network infrastructures sharing models such as Multi-Operator Core Node (MOCN) or Multi-Operator Radio Access Network (MORAN).

• The partnership reflects the companies’ commitment towards enabling an efficient and cost-effective implementation for immersive, wide-area 5G coverage ahead of the full-scale infrastructure deployment in the country. (The Edge Daily)

• Kossan Rubber Industries Bhd is selling off a vacant piece of freehold industrial land in Kuala Langat, measuring 390,397 sq metres, for RM147.8 mln, to Liansheng Paper (Malaysia) Sdn Bhd. The land sale is expected to bring about a net gain of RM35.4 mln. (The Star Online)

• Barakah Offshore Petroleum Bhd has issued a statutory notice on 16th January, 2020 against its client Petronas Carigali Sdn Bhd to claim RM477,467.37, in relation to work done by Barakah's unit in August 2016. The contract includes the provision of underwater services to Petronas Carigali, Petroliam Nasional Bhd's (Petronas') exploration arm. (The Edge Daily)

• Notion Vtec Bhd has been offered a final amount of RM22.2 mln from its insurer AXA Affin General Insurance Bhd for the business interruption loss settlement in-relation to a fire incident that occurred in its facility in 2017. This is on top of the RM159.4 mln claim offered by AXA Affin for fire damage to its building, machinery and stocks, which was settled in November 2018. The group has received about RM10.0 mln from the total RM22.2 mln payment in August last year, leaving the balance RM12.2 mln outstanding. (The Edge Daily)

Source: Mplus Research - 17 Jan 2020