More Volatility Ahead

• Despite Wall Street’s calmer market conditions on last Friday, the FBM KLCI (-4.8%) started off the week on a dour note following the exponential jump sharp in cases confirmed linked to Covid-19 in the country. The lower liners – the FBM Small Cap (-10.6%), FBM Fledgling (-8.3%) and FBM ACE (-11.9%), all took another dive, while the broader market finished in a sea of red.

• Expectedly, market breadth stayed negative as losers overrule gainers on a ratio of 1041-to-97 stocks. Traded volumes fell 21.2% to 4.47 bln shares investors opted to stay at sidelines, awaiting for stability.

• Once again, Nestle (-RM1.90) led the local bourse decliners list, followed by Hong Leong Financial Group (-RM1.12), Public Bank (-80.0 sen), Maybank (-59.0 sen) and Tenaga (-52.0 sen). Consumer products stocks like Carlsberg (- RM2.94), Heineken (-RM2.60), Panasonic (-RM2.1), and Ajinomoto (- RM1.88). WCT slipped 4.0 sen following an unfavourable final award ruling in an arbitration case

• In contrast, Genting Plantations (+8.0 sen), Toyoink (+7.5 sen), ARK Resources (+6.5 sen), Grand Hoover (+6.0 sen) and Sarawak Plantations (+5.0 sen) advanced on the broader market. Meanwhile, Sime Darby Plantations (+12.0 sen) and IOI Corporation (+4.0 sen) was the two outperformers on the FBM KLCI.

• Asia benchmark indices started off the week on a dour note as the Nikkei sank 2.5% after enduring a choppy trading session. The Hang Seng Index dipped 4.0%, while the Shanghai Composite slipped 3.4% as the number of cases of Covid-19 remained on the rise, triggering lockdown in several countries. Asia stockmarkets, meanwhile, were painted in red yesterday.

• U.S. stockmarkets continue their freefall as the Dow tumbled 12.9%, hitting another limit-down despite the U.S. Federal Reserve intervention to cut its’ federal-fund rates to 0%-0.25% and delivered a massive stimulus package. On the broader market, the S&P 500 sank 12.0% with all eleven major sectors in the red, while the Nasdaq ended 12.3% lower.

• Earlier, European stockmarkets - the FTSE (-4.0%), CAC (-5.8%) and DAX (- 5.3%) were all battered, reacting to the nationwide lockdown in Spain over a 15- day period. At the same time, both France and Germany have already closed several sectors of their economies and fortified borders in efforts to contain the spread of Covid-19, whilst the European Commission President is considering travel ban to most foreign visitors into Europe for 30 days.

The Day Ahead

• Selling activities persisted as Bursa Malaysia took a dive alongside with the rout across global equities that are still attempting to find a bottom. This came despite the firmer stimulus measure announced by the U.S. Federal Reserve. The key index has broken successive support levels, the latest being the 1,300 level and this is continuing to leave the market is a dour mood with the psychological support at 1,200 points now coming into play.

• We think the negative overnight performance on key global markets, coupled with the nationwide lockdown till end-March 2020 will continue to pile pressure for further downside over the foreseeable future. At the moment, the 1,300 level will serve as the immediate resistance, which we reckon a technical recovery be in the offing.

• The lower liners and broader market shares have also endured a wretched spell amid the ongoing volatility and uncertainties. We think the condition will linger due to the lack of buying interest as most retail players will stay defensive until there is a change in the market’s direction.

COMPANY BRIEF

• FGV Holdings Bhd’s subsidiary, FGV Prodata Systems Sdn Bhd (FGV Prodata), has secured a project to supply and install telecommunication towers and ancillaries to the Malaysian Communications and Multimedia Commission (MCMC) under its National Fiberisation and Connectivity Plan (NFCP). The towers are meant for the provisioning of public cellular services under the NFCP, as part of MCMC's efforts to plan and implement universal service provision in Malaysia. (The Edge)

• Esthetics International Group Bhd (EIG) has been granted a four-and-a-half-year extension of its distributorship with USbased premium skincare provider Dermalogica Inc. EIG will continue to be the exclusive distributor for Dermalogica skin care products in six countries, namely Malaysia, Singapore, Indonesia, Hong Kong, Thailand and Brunei until 31st December 2024, with an option to extend or renew further. (The Edge)

• Yinson Holdings Bhd has announced that its Vietnam joint venture (JV) PTSC Asia Pacific Pte Ltd (PTSC AP) has entered into a bareboat charter contract worth US$122.9 mln (RM528.3 mln) with Petrovietnam Technical Services Corp (PTSC) commencing from 1st July 2017 to 30th June 2021. The contract between PTSC AP and PTSC is for the charter of PTSC Lam Son floating production, storage and offloading vessel for the petroleum operations within the Lam Son field offshore Vietnam. (The Edge)

• SYF Resources Bhd is selling a parcel of freehold land it owns in Semenyih via a wholly-owned subsidiary for RM33.7 mln, which will book it an estimated net gain of RM1.4 mln. The parcel, which measures 3.5-ha is held under Giat Armada Sdn Bhd, is being sold to Pacific Parkland Sdn Bhd (PPSB). Of the disposal proceeds raised, the company will use RM20.0 mln to repay part of its existing bank borrowings and RM11.0 mln as working capital. (The Edge)

• Petronas Dagangan Bhd (PetDag) and Petronas Chemicals Group Bhd (PChem) have both clarified that their operations and business have not been impacted by the fire incident that occurred within the Pengerang Refinery Complex on 15th March 2020. The incident which occurred at the Diesel Hydro Treating Unit (DHT) within the Pengerang Refinery Complex, claimed five lives. (The Edge)

• Bermaz Auto Bhd’s (BAuto) 3QFY20 net profit fell 66.5% Y.o.Y to RM27.2 mln, largely due to lower contribution from the domestic operations and associate company Mazda Malaysia Sdn Bhd on the back of lower domestic sales volume and margin as a result of higher costs on the new facelift of the CX-5 model compelled by the current market sentiment. Revenue for the quarter declined 39.9% Y.o.Y to RM467.5 mln.

• For 9MFY20, cumulative net profit dropped 52.2% Y.o.Y to RM98.1 mln. Revenue for the period skid 25.3% Y.o.Y to RM1.46 bln. An interim dividend of 1.45 sen per share for the quarter under review, payable on 28th May 2020 was declared. (The Sun)  

Source: Mplus Research - 17 Mar 2020