Dour Sentiments

• The FBM KLCI (-1.4%) remained downbeat for the fifth straight session after succumbing to selling pressure in the second half of the trading session yesterday, in line with the weakness across regional indices. The lower liners – the FBM Small Cap (-6.0%), FBM Fledgling (-4.1%) and FBM ACE (-5.3%), all remained in the red, while the REIT sector (+0.3%) that is touted as defensive in nature outperformed the negative broader market.

• Market breadth stayed negative as losers overruled gainers on a ratio of 745-to-221 stocks. Traded volumes fell 21.3% to 3.49 bln shares as investors remain wary on the recent volatility

• Key decliners on the FBM KLCI were Public Bank (-88.0 sen), Malaysia Airport Holdings (-58.0 sen), Press Metal (-39.0 sen), Hap Seng Consolidated (-20.0 sen) and Axiata (-18.0 sen). Laggards on the broader market were Aeon Credit (-71.0 sen), Ajinomoto (-60.0 sen), Batu Kawan (-58.0 sen) and Scientex (-50.0 sen). Aco Group sank 12.0 sen on its’ debut on Bursa Malaysia.

• In contrast, Fraser & Neave (+42.0 sen), Sungei Bagan Rubber (+35.0 sen), TimedotCom (+16.0 sen), QL Resources (+13.0 sen) and Spritzer (+12.0 sen) advanced on the broader market. Meanwhile, Nestle (+RM2.70), Petronas Dagangan (+96.0 sen), Hong Leong Financial Group (+30.0 sen), Tenaga (+18.0 sen) and KLK (+14.0 sen) outperformed on the FBM KLCI.

• Asia benchmark indices resumed their downtrend after economists expect the ASEAN region to sink into a recession in 2020 due to the Covid-19 outbreak as the Nikkei fell 1.7%. The Shanghai Composite slipped 1.8%, while the Hang Seng Index sank 4.2%. Asia stockmarkets, meanwhile, closed mostly lower yesterday.

• U.S. stockmarkets took another whiplash as the Dow (-6.3%) erased almost all of its gains accrued since U.S. President Donald Trump’s inauguration in January 2017 as concern over economic growth drags on. Similarly, the S&P 500 slipped 5.2% with the energy sector (-12.6%) took the heaviest blow after crude oil prices collapse to the lowest level since 2002, while the Nasdaq finished 4.7% lower.

• Earlier, European stockmarkets – the FTSE (-4.1%), CAC (-5.9%) and DAX (- 5.6%), all erased their previous session gains, driven by the intensifying fears over recession. The move came despite the ban of short-selling in European stocks.

The Day Ahead

• As expected, the FBM KLCI managed to open and lingered mostly in the positive territory in the first half of the trading session yesterday as movement control order in the country took place. Gains, however, were quickly disappeared with concern over global economic growth return to the fore. Amid the rising risk of recession, the downtrend may linger for the time being.

• At the same time, the CBOE Volatility Index which is a measure of fear gauge on Wall Street spiked above the 2008 global financial crisis peak suggest that the weakness across global equities remain on the table. With market conditions likely to remain dour, we reckon the FBM KLCI will continue its’ downward momentum towards the 1,200 support level or even towards the 1,160 level. A recovery, which we see little sunshine may bring mild gains, capped at the 1,250 level.

• Similarly, the broader market’s recovery on intraday yesterday were quickly brushed off after fifteen minutes into the opening bell. This suggests that the weakness may prevail for a little longer.

COMPANY BRIEF

• Censof Holdings Bhd has disposed 43.0 mln shares in associate firm Dagang Nexchange Bhd (DNeX) in the open market due to margin call. The forced selling action on Tuesday by MIDF had raised RM3.9 mln for the company. The original cost of the investment was RM8.8 mln. Proceeds from the disposal will be used to reduce its share margin loan. The disposal reduced Censof's stake in DNeX by 2.5% to 13.2%, or 232.0 mln shares. (The Star)

• Cypark Resources Bhd’s 1QFY20 net profit increased 11.8% Y.o.Y to RM14.5 mln, due to the full-year effect of adoption of MFRS 15. Revenue for the quarter gained 2.8% Y.o.Y to RM90.9 mln. (The Edge)

• Uzma Bhd’s majority-owned subsidiary, Setegap Ventures Petroleum Sdn Bhd, has received a letter of award from ExxonMobil Exploration and Production Malaysia Inc (EMEPMI) for provision of pumping equipment and services. The contract term is for four years, with EMEPMI having the option to extend it by another year on the same terms and rates. (The Edge)

• SYF Resources Bhd is selling a freehold property in Semenyih, Selangor, for RM11.7 mln cash to pare down its borrowings and add to its working capital. The disposal of the property which comprises a 1.3-ha parcel of land and a single-storey factory is expected to be completed by 4Q2020 and give rise to an estimated net gain on disposal of RM500,000. (The Edge)

• Tien Wah Press Holdings Bhd’s 51.0%- owned Max Ease International Ltd (MEIL) has secured a five-year extension to supply printed cartons to British American Tobacco Group. The five-year extension supply of the printed cartons in Malaysia, Singapore and Vietnam for the domestic/and or export markets covers the period from 1st January 2020 to 31st December 2024, subject to an execution of a formal contract that is expected to take place in 2Q2020. (The Edge)

• Businessman Datuk Mohd Zakhir Siddiqy Sidek has been appointed as chairman of Scomi Energy Services Bhd (SESB), a month after he emerged as a substantial shareholder with an 18.0% stake in the company. Mohd Zakhir, 52, who is also the chairman of HSS Engineers Bhd, acquired the stake in SESB after Scomi Group Bhd defaulted on an RM21.0 mln loan from him. Scomi Group still owns 29.4% in SESB. (The Edge)

• A wholly-owned subsidiary of TAS Offshore Bhd has secured contracts for the sale of five units of Garbage Collection Craft and two units of Flotsam Retrieval Craft for RM19.6 mln. The vessels were sold to its foreign customers and are expected to be delivered by the end-2020. (The Edge)

• Malaysia’s Energy Commission has granted Gas Malaysia Bhd’s whollyowned subsidiary Gas Malaysia Energy and Services Sdn Bhd (GMES) a 10-year licence to import liquefied natural gas (LNG) for regasification in the country. The licence allows GMES to import the LNG into Malaysia by any means other than by transshipment. (The Edge)  

Source: Mplus Research - 19 Mar 2020