Sentiments Remain Cautious

• The FBM KLCI (-1.9%) continues to trend lower for the fourth successive session despite recovering most of its’ intraday losses yesterday. The downturn, however, appears to turn soft on signs of bargain hunting activities in selected blue chips. The lower liners – the FBM Small Cap (-2.7%), FBM Fledgling (- 2.7%) and FBM ACE (-4.2%), all extended their losses, while the Technology sector (+1.5%) outperformed the negative broader market.

• Market breadth stayed negative as losers outshone gainers on a ratio of 713-to-267 stocks. Traded volumes fell 0.9% to 4.43 bln shares as trading interest fades on the recent volatility.

• More than half of the key index components fell, dragged down by KLK (-80.0 sen), followed by Public Bank (- 60.0 sen), Hong Leong Financial Group (-48.0 sen), Maxis (-46.0 sen) and Hong Leong Bank (-42.0 sen). Notable decliners on the broader market include Panasonic (-RM2.02), Dutch Lady (- RM1.40), Aeon Credit (-90.0 sen), Allianz (-60.0 sen) and Ajinomoto (-52.0 sen).

• Amongst the biggest advancers on the broader market were Heineken (+66.0 sen), Vitrox (+51.0 sen), Fraser & Neave (+38.0 sen), Syarikat Takaful (+25.0 sen) and Muar Ban Lee (+21.0 sen). Key winners on the FBM KLCI were Nestle (+RM2.30), Petronas Dagangan (+20.0 sen), Hartalega (+13.0 sen), Dialog (+11.0 sen) and Maybank (+7.0 sen).

• Asia benchmark indices finished on a mixed note on a choppy session as the Nikkei rose 0.1%, while the Hang Seng Index (+1.1%) recovered some of its’ previous session losses. The Shanghai Composite, however, fell 0.3% after lingering mostly in the red. Asia stockmarkets, meanwhile, closed mixed on Tuesday. U.S. stockmarkets rebounded from the recent slump as the Dow jumped 5.2% following Trump’s administration proposal of an emergency stimulus package valued at US$1.0 trn that involves a special lending program to support credit flow of households and businesses. On the broader market, the S&P 500 surged 6.2% with all eleven major sectors in the positive, while the Nasdaq finished 6.2% higher. Earlier, European stockmarkets – the FTSE (+2.8%), CAC (+2.8%) and DAX (+2.3%), all rebounded, taking cue from the positive developments on Wall Street overnight. In the meantime, France unveiled a US$50.0 package to help small business and employees. HE DAY AHEAD After trading sharply lower at the opening bell, the FBM KLCI managed to find its’ footing as bargain hunting activities emerged sending the key index to recover most of its’ intraday losses. The recovery was stemmed largely by global authorities move to inject stimulus package, coupled with the Malaysian government to impose a temporary lockdown in order to contain the spread of Covid-19. We see the pre-emptive move as a positive sign that was proved effective in China which could help to provide some alleviation to the beaten down markets. For now, the FBM KLCI is attempting to build a base with potential rebound, targeting the 1,280 and 1,300 levels. On However, should the 1,200 level failed to hold, further downside may escalate towards the 1,160 level. At the same time, traders are taking position on nibbling beaten down stocks on the broader market that may see some support coming into play. Nevertheless, we think the recovery may be mild at current moment amid the generally weak market sentiment.

COMPANY BRIEF

• Poh Kong Holdings Bhd’s 2QFY20 net profit rose 57.6% Y.o.Y to RM10.6 mln, as the uptrend in gold prices improved operating profits. Revenue for the quarter however, fell 8.0% Y.o.Y to RM252.1 mln.

• For 1HFY20, cumulative net profit jumped 88.8% Y.o.Y to RM18.7 mln. Revenue for the period, however, fell 14.1% Y.o.Y to RM457.1 mln. (The Sun)

• Kumpulan Jetson Bhd has been awarded RM78.9 mln contract by Asia Pacific University Sdn Bhd for the construction of a private higher education institution. The company said its wholly-owned subsidiary Jetson Construction Sdn Bhd has accepted the contract, which is expected to be completed by 30th June 2021. (The Edge)

• Kelington Group Bhd (KGB) said its wholly-owned subsidiary Kelington Engineering (S) Pte Ltd (KES) is claiming for total compensation of SGD$6.4 mln (RM19.5 mln) from its subcontractor Mutiara (FE) Pte Ltd, as back charges and liquidated damages, as well as scope deductions incurred to rectify defects and non-compliant works. Mutiara was engaged by KES under two separate subcontracts for a project in Singapore. (The Edge)

• MTAG Group Bhd has called off its proposed acquisition of two plots of land in Plentong, Johor to build its new manufacturing plant. MTAG announced that the land is no longer considered suitable to construct its plant, due to differing soil and earth conditions. It will seek the full refund of the RM491,191 deposit paid to the vendor. (The Edge)

• Malayan United Industries Bhd’s (MUI) UK-listed retailer Laura Ashley Holdings plc has filed for administration, due to inability to secure third-party debt funding in a timely manner sufficient to support working capital requirements. In addition, MUI Asia Ltd which has a 35.2% stake in Laura Ashley has confirmed it is unable to provide financial support in the required timeframe. (The Edge)  

Source: Mplus Research - 18 Mar 2020