Still Finding For A Bottom

• The FBM KLCI (+6.9%) snapped a sixday onslaught as the key index staged a sharp recovery in tandem with gains across regional equities, boosted by central bank’s accommodative policies across the globe, including Bank Negara. Despite the sharp uptick, the key remain in the red for the week, falling -3.1% W.o.W. The lower liners - the FBM Small Cap (+9.4%), FBM Fledgling (+5.9%) and FBM ACE (+10.0%), all rebounded, while all 13 broader market sector finished higher, led by the energy sector (+12.7%).

• Market breadth turned positive as gainers thumped losers on a ratio of 895-to-145 stocks. Traded volumes rose 21.4% to 5.06 bln shares as bargain hunting activities took precedence.

• Leading the key index was Public Bank (+RM1.38), followed by Petronas Gas (+RM1.08), Hong Leong Financial Group (+RM1.02), Malaysia Airport Holdings (+70.0 sen) and Tenaga (+70.0 sen). Consumer products giants like Carlsberg (+RM3.12), Heineken (+RM2.20), Fraser & Neave (+RM1.70) and Panasonic (+RM1.54) rallied, while WCT Holdings jumped 5.0 sen after bagging a RM1.20 bln contract for the development of Pavilion Damansara Heights.

• Meanwhile, Boustead Heavy Industries Corporation (-13.5 sen), Country View (- 9.0 sen), New Hoong Fatt (-9.0 sen), TimedotCom (-9.0 sen) and Axis REIT (- 7.0 sen) slipped on the broader market. There were only three decliners on the FBM KLCI, namely Nestle (-RM2.00), Petronas Dagangan (-8.0 sen) and Sime Darby (-2.0 sen).

• Asia benchmark indices finished higher as the Shanghai Composite and Hang Seng Index jumped 1.6% and 4.9% respectively, taking cue from the positive sentiment on Wall Street overnight. Japanese equities were closed for the Vernal Equinox Day public holiday. Asia stockmarkets, meanwhile, finished higher at Friday’s closed.

• U.S. stockmarkets recorded its worst week since 2008 financial crisis as the Dow sank 4.6% after reversing all its’ intraday gains on last Friday after World Health Organization warned that global health systems were “collapsing” under the strain of the Covid-19 pandemic, coupled with the unabated selling in crude oil prices. Similarly, the S&P 500 (- 4.3%) was battered with all eleven major sectors in the red, while the Nasdaq slipped 3.8%.

• Earlier, European stockmarkets - the FTSE (+0.8%), CAC (+5.1%) and DAX (+3.7%), all extended their gains, boosted by optimism over a slew of stimulus measures announced by central banks to cushion the impact of the ailing economy. At the same time, Bank of England suspended 2020 stress tests for the eight major U.K. banks and building societies.

The Day Ahead

• Expectedly, the overdue recovery took place on Bursa Malaysia after enduring a wretched spell over the past couple of weeks. The recovery was mainly induced by Wall Street’s positive performance, coupled with stimulus measures undertaken by central banks across the globe. Despite that, we think that it is still early to cheer on the recovery as bargain hunting activities will be punctuated by quick profit taking actions.

• Under the prevailing downbeat sentiment on Wall Street, we think the volatility will resume with the FBM KLCI likely to reverse its’ sharp gains recorded on last Friday. For now, investors may grapple with the volatility with the FBM KLCI potentially heading back towards the 1,250 level or even the 1,210 support level. On the flipside, we think that the upsides could also be measured with the 1,320-1,350 serving as the resistance levels.

• We also think that the broader market shares and the lower liners will experience more choppiness as traders will be quick to offload their position to avoid further volatility. With the negative sentiment likely to grapple the market amid the rising Covid-19 outbreak, we reckon that trading activities will be centered towards the healthcare sector, particularly in glovemakers stocks, in our view.

COMPANY BRIEF

• PLB Engineering Bhd (PLB) has signed a Memorandum of Understanding (MOU) with China Railway Engineering Corporation (M) Sdn Bhd (CRECM) to form a special purpose vehicle (SPV) for the sole purpose of carrying out rehabilitation works on the Jelutong dumpsite in Penang. In return, CRECM will get 90.0% of the land that PLB is entitled to under the conditional joint development agreement (JDA) that PLB signed with the Penang Government just last month for the dumpsite rehabilitation. (The Edge)

• Scomi Group Bhd, which had in May 2019 planned to make a cash call to raise up some RM214.0 mln to pare down its debts, has decided to call off the multiple corporate exercises. Scomi’s board of directors said it has decided to abort the proposals due to the current market conditions as well as the deteriorating market price of its shares. (The Edge)

• Tex Cycle Technology (M) Bhd is forming a joint venture company (JVco) with EFS Revision Energy Sdn Bhd to expand its renewable power generation business. Tex Cycle’s wholly-owned Tex Cycle Sdn Bhd (TCSB) has inked a shareholders' agreement with EFS today to establish the JVco, EFS MySolar Sdn Bhd, which will identify, evaluate and execute strategic business opportunities in the solar energy sector. The JVCo, which will have a share capital of 1 mln shares of RM1 each, will be 70.0% owned by Tex Cycle and 30.0% held by EFS. (The Edge)

• Gamuda Bhd’s property arm Gamuda Land has reported that its 548-unit executive condominium joint venture (JV) project known as OLA in Singapore has been oversubscribed, after receiving 1,163 electronic applications from interested buyers. OLA, which is is slated for completion in 2023 is located along Anchorvale Crescent in Sengkang, is a JV with Evia Real Estate (7) Pte Ltd. (The Edge)

• AirAsia Group Bhd and AirAsia X Bhd (AAX) announced that BDO Governance Advisory Sdn Bhd, which was in charge of conducting an independent review on corruption allegations related to the Airbus scandal against their co-founders Tan Sri Tony Fernandes and Datuk Kamarudin Meranun, has given the duo the all clear. Following this, Fernandes and Kamarudin have been reinstated to their posts as group chief executive officer (CEO) and executive chairman of AirAsia respectively. (The Edge)  

Source: Mplus Research - 23 Mar 2020