Momentum Picking Steam

• The FBM KLCI (-0.6%) staged a mild retracement from the two-day rally following the slump in crude oil prices overnight. The lower liners - the FBM Small Cap (-1.8%), FBM Fledgling (- 1.2%) and FBM ACE (-3.5%), all retreated, while the property (+0.03%) and telecommunications & media sector (+0.04%) outperformed the negative broader market.

• Market breadth turned negative as losers outpaced the gainers on a ratio of 617-to-316 stocks. Traded volumes fell 18.8% to 5.36 bln shares as trading participants retreated on the negative market sentiment.

• More than half of the key index components fell, dragged down by Nestle (-60.0 sen), followed by KLK (- 56.0 sen), PPB Group (-42.0 sen), Sime Darby Plantation (-29.0 sen) and Tenaga (-26.0 sen). Notable losers on the broader market include Panasonic (- 30.0 sen), UWC (-20.0 sen), Heineken (- 18.0 sen), Pentamaster (-18.0 sen) and Frontken (-15.0 sen).

• On the flipside, Shangri-La (+29.0 sen), Rapid Synergy (+28.0 sen), Syarikat Takaful (+20.0 sen), Carlsberg (+18.0 sen) and Euro Holdings (+17.0 sen) rose on the broader market. Key winners on the FBM KLCI include Press Metal (+18.0 sen), DIGI (+14.0 sen), Hartalega (+12.0 sen), Petronas Dagangan (+10.0 sen) and Axiata (+8.0 sen).

• Asia benchmark closed on a mixed note as the Nikkei (+2.1%) extended its’ gains, on the weaker Japanese Yen against the Greenback, whilst investors digested the massive stimulus package announced by the government. The Hang Seng Index slipped 1.2, while the Shanghai Composite fell 0.2% after trading in a choppy manner. Asia stockmarkets, meanwhile, finished mostly lower yesterday.

• U.S. stockmarkets rebounded to close sharply higher as the Dow jumped 3.4% as investors cheered after Vermont Senator Bernie Sanders dropped out of the presidential race on relief over his proposal to end private health insurance. On the broader market, the S&P 500 surged 3.4% with all eleven major sectors advanced, while the Nasdaq rose 2.6% higher.

• European stockmarkets closed mixed after coming off their session lows as the FTSE and DAX shed 0.4% and 0.2% respectively after Euro finance ministers meeting ended without a united approach to shoulder the burden of Covid-19’s fallout. The CAC, however, rose 0.1% despite Bank of France predicted a -6.0% Y.o.Y slump in 1Q2020 GDP — the biggest contraction since the World War II.

The Day Ahead

• Expectedly, Malaysian equities retraced on profit taking activities amid the lack of leads that also saw market following dwindling. We, however, view the pullback as a positive move to prevent the market from overheating in order to establish more room for further gains to unfold. At the same time, the fresh buying on Wall Street and the rally in crude oil prices overnight may provide a sentiment boost on the local bourse.

• As it is, further upside appears to be on the table following the key index’s move to clear the 1,350 level recently. Hence, the positive sentiment may power the FBM KLCI towards the 1,400 resistance level. On the downside, the 1,260 points support will come into play, should the 1,300 support gives way.

• The lower liners and broader market shares are still mixed with bouts of quick profit taking activities and the trend looks to persist due as market sentiment remain indifferent. Nevertheless, the firm trading activities with traded volumes and value above their historical averages suggest that risk appetite still lies within the equities market.

COMPANY BRIEF

• MISC Bhd shipping unit AET has secured long-term charter contracts awarded by Total SA to own and operate two very large crude carriers (VLCCs). The new build LNG dual-fuel vessels, scheduled to be delivered to AET in 1Q2022, are targeted for operations in international waters.

• The two newbuilds will be powered by LNG and will be amongst the most environmentally friendly VLCCs in the market. These ships will be MISC's first LNG dual-fuel VLCCs. (The Star)

• Genting Malaysia Bhd which has temporarily suspended its operations in Malaysia and overseas due to the coronavirus pandemic reported that it won't be able to comment on its business outlook following latest annual report released on 8th April 2020.

• The group has temporarily suspended operations at Resorts World Genting, Resorts World Awana, Resorts World Kijal and Resorts World Langkawi since March 18, in compliance with the Movement Control Order (MCO) imposed by the government. The group has also temporarily shuttered its operations in the US, Bahamas and the UK. (The Star)

• FGV Holdings Bhd has appealed against the Roundtable on Sustainable Palm Oil (RSPO)’s decision to re-suspend the certification of its Kilang Sawit Serting mill and as well as all certification processes for currently uncertified mills.

• The RSPO Complaint Panel had on 13th January 2020 informed FGV that it would be suspending certification for the Serting mill and all other uncertified units as they found the plantation giant have flouted the RSPO’s rules. FGV, however, has worked with the Sabah Immigration Department and several foreign embassies to document and regularise 6,158 workers by the end of June 2020. (The Edge)

• Gas Malaysia Bhd is waiving gas charges for all Government hospitals in the country and offering a rebate of RM100 per low-cost residential customer from April 2020 to September 2020 to alleviate their burden due to the Covid-19 pandemic and Malaysia’s Movement Control Order (MCO) to curb the outbreak. For retailers and hotels, Gas Malaysia said it will temporarily halt meter reading and issuance of bills from April to June 2020. (The Edge)

• Precision parts manufacturer Notion VTec Bhd’s wholly-owned subsidiaries NotionVenture Sdn Bhd and Notion International (M) Sdn Bhd are allowed to operate during the MCO period set by the Ministry of International Trade and Industry (MITI). (The Edge)  

Source: Mplus Research - 9 Apr 2020