Pullback Beckons

• Tracking the gains on Wall Street overnight, whilst monitoring on the economic stimulus package announced by the Malaysian government, the FBM KLCI (+1.1%) march higher for the fourth straight session. Consequently, the key index rose 3.1% W.o.W, recovering most of the previous week’s fall. The lower liners - the FBM Small Cap (+2.0%), FBM Fledgling (+1.6%) and FBM ACE (+2.4%), all extended their gains, while the broader market finished higher with all 13 sectors in the green.

• Market breadth stayed positive as gainers thumped the losers on a ratio of 711-to-232 stocks. Traded volumes climbed 19.9% to 4.23 bln shares amid the upbeat market sentiment.

• More than half of the key index constituents rose, led by Hong Leong Financial Group (+56.0 sen), Public Bank (+36.0 sen), Hartalega (+21.0 sen), Petronas Dagangan (+20.0 sen) and Tenaga (+18.0 sen). Notable advancers on the broader market include Dutch lady (+RM1.88), Panasonic (+RM1.14), Pentamaster (+52.0 sen), Ajinomoto (+50.0 sen) and LPI (+48.0 sen).

• On the other side of the trade, Imaspro (- 10.0 sen), QL Resources (-10.0 sen), Advanced Packaging (-9.0 sen), YNH Property (-9.0 sen) and IJM Corporation (-7.0 sen) fell on the broader market. Key losers on the local bourse were Nestle (-RM1.00), Petronas Gas (-16.0 sen), IHH (-8.0 sen), PPB Group (-4.0 sen) and MISC (-3.0 sen).

• Asia benchmark indices advanced as the Nikkei jumped 3.9%, taking cue from the positive sentiment on Wall Street overnight. Despite coming off from their session highs, both the Hang Seng Index and Shanghai Composite rose 0.6% and 0.3% respectively. Asia stockmarkets, meanwhile, finished mostly higher on last Friday

• U.S. stockmarkets endured another rout, snapping a three-day winning streak as the Dow slipped 4.1% after the number of cases of Covid-19 recorded in the country topped the 100,000 mark. On the broader market, the S&P 500 fell 3.4% with only the utilities sector (+0.3%) outperformed, while the Nasdaq finished 3.8% lower.

• Major European stockmarkets - the FTSE (-5.3%), CAC (-4.2%) and DAX (-3.7%), all erased their previous session gains as the number of Covid-19 cases continue to trend higher, triggering more countries to opt for a lockdown. Market sentiment turned bearish after the number of Covid- 19 cases in United States surpassed China.

The Day Ahead

• No doubt the economic stimulus packages announced across the globe managed to halt the recent global equities meltdown. However, attention has now shifted back to the impact of Covid-19 that saw number of cases across the global rose at an exponential rate, whilst the record high number of unemployment claims in the United States gave markets a reality check to investors. After chalking some more than 120 points from the recent low, we reckon that a pullback is imminent for the FBM KLCI.

• Although the Malaysian government has laid out massive stimulus package at the end of the week, we think that stocks across Asia, including the FBM KLCI may take a turn from their recent winning streak, with the key index potentially drifting back towards the 1,300 psychological level. Any gains, which may be difficult to come by which will see the 1,350 and 1,360 levels continue to serve as the immediate resistances.

• The recent rebound was not encouraging, mainly spurred by the central banks move to introduce their stimulus measures. Hence, the rebound is not sustainable for a longer period as investor may opt to lock in recent profits. With the mid-tolong term dour trend still in place, the lower liners may also drift lower over the foreseeable future.

COMPANY BRIEF

• Tenaga Nasional Bhd has set aside RM150.0 mln following the Government’s stimulus announcement that Malaysian households and businesses will get tiered rebates for six months on their electricity bills.

• Under the tiered rebate system, 3.0 mln domestic consumers (with monthly consumption of below 200kWh) will receive a 50% rebate, while 1.5 mln consumers (with monthly consumption between 201kWh and 300kWh) will get a 25% rebate. Another 2.2 mln consumers (with monthly consumption between 301kWh and 600kWh) will get a 15% rebate. (The Edge)

• Mlabs Systems Bhd is going to provide its video-conferencing products to Ipharmacare Malaysia Sdn Bhd to complement the latter's online pharmaceutical platform. In return, Ipharmacare will support Mlab's efforts to promote these products, which will include but not limited to video conferencing systems, messaging systems and network solutions, to its platform users and/or independent pharmacies. (The Edge)

• As the date of the group's annual general meeting (AGM) remains uncertain, Malayan Banking Bhd (Maybank) has decided to reclassify its final cash dividend of 39 sen per share to a second interim cash dividend of the same amount, to be paid on 6th May 2020. Initially, the final cash dividend was proposed in the group’s 4Q2019 results, for the approval of shareholders at the forthcoming AGM. (The Edge)

• Xin Hwa Holdings Bhd announced that its wholly-owned subsidiary Xin Hwa Trading & Transport Sdn Bhd (XHTT) has been appointed by Malaysia Marine and Heavy Engineering Sdn Bhd as a subcontractor of logistics services. While the contract has no firm value as it does not constitute a commitment for volume of orders, the company expects to generate revenue of about RM2.0 mln per annum from the three-year contract. (The Edge)  

Source: Mplus Research - 30 Mar 2020