Pullback Beckons

• The FBM KLCI (-0.4%) started off the week on a softer note as the key index snapped a three-day winning streak after lingering mostly in the negative territory yesterday. The lower liners, however, finished mostly higher as the FBM Small Cap and FBM ACE added 0.2% and 1.7%, while the broader market closed mixed with the technology sector (+0.9%) outperformed its’ peers.

• Market breadth turned negative as decliners outpaced the advancers on a ratio of 449-to-408 stocks. Traded volumes fell 10.9% to 2.53 bln shares on signs of slowdown ahead of the extended weekend break.

• Key losers on the FBM KCLI were Petronas-related heavyweights like Petronas Dagangan (-6.0 sen), Petronas Gas (-26.0 sen), Nestle (-20.0 sen), KLK (-14.0 sen) and Public Bank (-12.0 sen). Amongst the biggest decliners on the broader market were BAT (-RM1.00), United Plantations (-34.0 sen), Heineken (-22.0 sen), Scientex (-21.0 sen) and Tasek Corporation (-21.0 sen).

• In contrast, significant gainers gainers on the broader market include technology stocks like KESM Industries (+50.0 sen), Pentamaster (+33.0 sen) and Vitrox (+25.0 sen) while Batu Kawan and Dayang gained 20.0 sen and 19.0 sen respectively. Meanwhile, Top Glove (+6.0 sen), Hartalega (+5.0 sen), IHH (+5.0 sen), PPB Group (+4.0 sen) and Tenaga (+4.0 sen) advanced on the key index.

• Asia benchmark indices finished mostly higher as the Nikkei and Shanghai Composite rose 0.2% and 0.7% respectively, after the People Bank of China unexpectedly kept its’ benchmark interest rate on hold. The Hang Seng Index, however, fell 0.9% amid another wave of social unrest over the weekend. ASEAN stockmarkets, meanwhile, closed mixed on Monday.

• U.S. stockmarkets were closed for the Martin Luther King Jr. public holiday. Futures market finished mildly higher after enduring a choppy note.

• Earlier, major European indices closed mostly lower as the FTSE and CAC fell 0.3% and 0.4% respectively as policymakers and business leaders gather in Davos, Switzerland for the annual World Economic Forum (WEF) conference. The DAX, however, managed to recover all its’ intraday losses to close 0.2% higher.

The Day Ahead

• After a build-up on recent gains, sentiments on the local bourse has turned dour as quick profit taking activities took precedence. The renewed volatility in commodity prices, weaker Ringgit and the unabated tension over at Hong Kong also does not seem in favour to the market conditions as the social unrest may prolong over the foreseeable future.

• With sentiment turning weaker, the FBM KLCI may trade in the consolidation band, ranging between the 1,570 and 1,595 levels. Any upsides, however, will be capped at the 1,615 level, while downside risk is cushioned at the 1,570 level, followed by the 1,550 level.

• The rally in lower liners and broader market shares are also taking a pause as we head towards the festive shortened weekend break. Nevertheless, the technology shares continue to attract much attention on expectations over a recovery in chip demand in 2020.

COMPANY BRIEF

• IOI Properties Group Bhd‘s directors Datuk Lee Yeow Chor and Lee Yeow Seng have given notices of their intention to deal in the shares of the company during the closed period, pending the announcement of IOI Properties' 2QFY20 results.

• Datuk Yeow Chor, who owns a direct stake of 0.124% in IOI Properties, has a deemed interest of 62.954% in the company. Meanwhile, Datuk Yeow Seng, who owns a direct stake of 0.002% in IOI Properties, has a deemed interest of 62.947% in the company. (The Edge Daily)

• Kerjaya Prospek Group Bhd was awarded the construction contract for a proposed development located at Jalan Kia Peng, Kuala Lumpur, for RM332.0 mln. This is its second construction job this month, bringing its contract secured to RM949.0 mln YTD. (The Edge Daily)

• The Malaysian Aviation Commission (Mavcom) has imposed financial penalties on AirAsia Group Bhd, AirAsia X Bhd (AAX) and Malaysia Airports Holdings Bhd’s (MAHB) subsidiary Malaysia Airports (Sepang) Sdn Bhd (MA Sepang), which manages the Kuala Lumpur International Airport (KLIA) and klia2.

• The penalties imposed on AirAsia and AAX, amounting to RM2.0 mln each, were due to the airlines' continued charging of credit card, debit card and online banking processing fees separate from their base fares, in contravention of the Malaysian Aviation Consumer Protection Code 2016 (MACPC), for the period from 10th August to 11th September, 2019.  MA Sepang, on the other hand, was penalised RM856,875 due to its failure to meet Mavcom's Airports Quality of Service Framework (Airports QoS Framework) targets during 2Q2019. (The Edge Daily)

• Dufu Technology Corp Bhd has proposed to undertake a bonus issue, on the basis of one bonus share-for-every one Dufu share held, at an entitlement date to be fixed. The exercise is expected to involve the issuance of up to 267.6 mln new shares. (The Edge Daily)

• Ajiya Bhd’s 4Q2019 net profit fell 10.5% Y.o.Y to RM1.6 mln, from RM1.8 mln a year earlier, in-tandem with a weaker revenue of RM81.7 mln (-10.9% Y.o.Y), from RM91.7 mln in the last corresponding year. Consequently, cumulative 2019 net profit plunged 77.3% Y.o.Y to RM5.6 mln, from RM24.6 mln in the previous year, while revenue fell 14.8% Y.o.Y to RM325.6 mln, from RM382.6 mln a year ago. (The Edge Daily)

• Perdana Petroleum Bhd has secured a 192-day contract from Petronas Carigali Sdn Bhd, Petroliam Nasional Bhd's (Petronas') exploration arm, for the provision of one anchor handling tug and supply (AHTS) vessels for RM9.0 mln. This comes on the heels of an earlier contract that was also awarded by Petronas Carigali in less than two months. Contract works has commenced on 24th December, 2019. (The Edge Daily)

• Vizione Holdings Bhd was awarded a design and build construction project worth RM170.0 mln in Kota Kinabalu, from Laju Damai Sdn Bhd. The project involves one block of 29-storey service suites totalling 664 units, as well as two blocks of three-storey shop offices comprising 38 units, along with carpark block, mechanical and electrical and external works. (The Edge Daily)

• Yong Tai Bhd has been approved by the Melaka state government to develop an international cruise terminal at its flagship RM8.0 bln mixed development, Impression City Melaka. Subsequently, the group has inked a Memorandum of Understanding (MoU) with Singapore Cruise Center Pte Ltd (SCC), in relation to the proposed engagement of SCC as the terminal's operator and manager. (The Star Online)  

Source: Mplus Research - 21 Jan 2020