Stabilising, Yet Uncertainty Prevails

• The FBM KLCI was traded in a choppy manner before trending 0.3% higher after clawing its’ way into the positive territory in the eleventh trading hour last Friday. Amid the indifferent market sentiment, the broader market closed mostly higher with the exception of financial services (-0.02%), property (- 0.1%) and utilities (-0.1%) underperformed.

• Market breadth stayed positive as advancers outpaced the decliners on a ratio of 465-to-330 stocks. Traded volumes, however, fell 2.2% with 2.67 bln shares exchanging hands.

• Leading the FBM KLCI winners list were KLK (+14.0 sen), PPB Group (+14.0 sen), Maxis (+13.0 sen), Nestle (+10.0 sen) and Tenaga (+10.0 sen). Significant advancers on the broader market were Dutch Lady (+RM1.00), Heng Yuan (+50.0 sen), Carlsberg (+34.0 sen), Syarikat Takaful (+32.0 sen) and Scientex (+25.0 sen).

• On the flipside, among the biggest losers on the broader market include Fraser & Neave (-98.0 sen), Muhibah (- 12.0 sen), Panasonic (-12.0 sen), SAM Engineering & Equipment (-12.0 sen) and Aeon Credit (-10.0 sen). Key index’s decliners were Hong Leong Financial Group (-22.0 sen) Public Bank (-18.0 sen), Petronas Dagangan (-10.0 sen), Hap Seng Consolidated (-7.0 sen) and Hong Leong Bank (-6.0 sen).

• Asia benchmark indices finished mixed as the Nikkei (-0.6%) extended its’ losses on the back of the stronger Japanese Yen against the Greenback. The Hang Seng Index rose 0.3%, while the Shanghai Composite added 0.4% as investors continue to monitor for developments over the Wuhan virus outbreak. ASEAN stockmarkets, meanwhile, closed mixed on last Friday.

• U.S. stockmarkets finished on a mixed note as the Dow fell 0.1% as retail sales climbed only 0.3% Y.o.Y in January 2020 that offset reports that the White House is considering tax incentives for people in the U.S. to trade stocks. On the broader market, the S&P 500 added 0.2% after recovering all its’ intraday losses, while the Nasdaq also closed 0.2% higher after enduring a choppy trading session.

• Major European indices – the FTSE (- 0.6%), CAC (-0.4%) and DAX (-0.01%), all extended their losses as concern over the coronavirus outbreak remain unabated. Market sentiment was also affected by the downbeat Germany’s 4Q2019 GDP growth that was flat at 0.0% Y.o.Y against economist’ expectations of 0.1% Y.o.Y rise.

The Day Ahead

• The FBM KLCI was nudged higher, mainly supported by the government’s announcement on a wave of economic stimulus in order to combat the Covid-19 outbreak's impact on Malaysia’s economy. However, gains are likely to be capped by the global economic growth that continues to remain lackluster.

• The FBM KLCI is expected to build on from last Friday’s gains as investors turned slightly risk-on mode amid the government’s announcement last week, coupled with signs of mild bargain hunting activities. A recovery should take place for the local bourse to march towards the 1,560 resistance level, followed by the 1,570 level. In contrast, the 1,535 level remains as the immediate support.  Market sentiment remained upbeat on the lower liners despite the sluggish key index performance as of late. We see the rotational play to remain on the table but any further gains will be dictated by a slew of corporate earnings release over the coming 1-2 weeks.

COMPANY BRIEF

• FGV Holdings Bhd is planning to venture into the business of dairy farming and fresh milk processing, in-line with its aim of becoming an integrated agrifood company.

• The group has earmarked RM10.0 mln to acquire new shares amounting to a 60.0% equity interest in the enlarged share capital of RedAgri Farm Sdn Bhd, which owns the Bright Cow brand of dairy products. (The Star Online)

• The Selangor State Director of Royal Malaysian Customs has cancelled Carlsberg Brewery (M) Bhd‘s bill of demand claiming for sales tax and penalty totalling RM20.7 mln.

• The group has received a letter confirming that "the bill of demand for sales tax amounting to RM13.8 mln and the penalty amounting to RM6.9 mln for the period of 1st July, 2011 to 14th January, 2014 has been cancelled, effective 15th January, 2020. (The Star Online)

• Minda Global Bhd plans to consolidate every 10 shares in the company into 1 new consolidated share, to shed the impression that its shares are just a "penny stock".

• The proposed exercise is expected to be completed in 2Q2020 and will result in a leaner share base of 124.0 mln shares, from 1.24 bln shares presently.  Minda Global's shares last traded at 5.5 sen apiece. At this price, the exercise will theoretically see its share price adjust to 55.0 sen per share. (The Edge Daily)

• Dolomite Corp Bhd‘s loss-making unit has been instructed by the High Court to pay RM35.5 mln to Fadzilah & Fikri Sdn Bhd, after failing to set aside a summary judgement application filed by the latter.

• The amount due (excluding a 5% annual interest from June 2018 and costs of RM10,000) that Dolomite was also ordered to paid is bigger than the quarry operator turned property developer's current market capitalisation of RM31.3 mln. (The Edge Daily)

• Gunung Capital Bhd‘s group Managing Director-cum-Chief Executive Officer (CEO) Datuk Syed Abu Hussin Hafiz Syed Abdul Fasal has ceased to be its substantial shareholder. The latter sold his 7.5 mln shares (or 3.1% direct stake) at 58.2 sen per share, in a combination of open and off markets disposal on 12th February, 2020.

• Following the disposal, Datuk Syed’s has disposed his entire Gunung shares of about 28.0% as of last April and has exited the loss-making passenger vehicle charterer.

• The 60-year-old has been reducing his stake in Gunung Capital since endDecember 2019, prompting talks of the emergence of new substantial shareholders. (The Edge Daily)  

Source: Mplus Research - 17 Feb 2020