Downward Bias Consolidation

• The FBM KLCI (-0.1%) erased all its’ intraday gains on the back of the eleventh hour profit taking activities as the key index retreated in tandem with the weakness across regional stockmarkets. The lower liners - the FBM Small Cap (-1.2%), FBM Fledgling (- 0.6%) and FBM ACE (-0.2%), all extended their losses, while the healthcare sector (+1.6%) outperformed the negative broader market.

• Market breadth stayed subdue as losers outnumbered the gainers on a ratio of 497-to-307 stocks. Traded volumes declined 16.3% to 3.12 bln shares as investors turned cautious following the recent market rebound.

• Close to half of the key index constituents retreated, dragged down by Sime Darby Plantations (-11.0 sen), followed by Hap Seng Consolidated (- 10.0 sen), Nestle (-10.0 sen), Petronas Gas (-6.0 sen) and DIGI (-5.0 sen). Laggards on the broader market include Fraser & Neave (-50.0 sen), Dutch Lady (-30.0 sen), Lysaght Galvanized (-18.0 sen), Aeon Credit (-17.0 sen) and KESM Industries (-12.0 sen).

• Notable advancers on the broader market were Chin Teck Plantations (+43.0 sen), Allianz (+24.0 sen), Oriental Interest (+12.0 sen), Power Root (+12.0 sen) and Supercomnet Technologies (+10.5 sen). Meanwhile, Petronas Dagangan (+22.0 sen), Top Glove (+17.0 sen), Maxis (+13.0 sen), KLK (+6.0 sen) and PPB Group (+4.0 sen) advanced on the local bourse.

• Asia benchmark indices ended lower the Nikkei (-2.3%) after the Japanese Yen rallied against the Greenback following the disappointment over a lack of asset buying from the Bank of Japan. The Shanghai Composite (-0.5%) extended its losses, while Hong Kong markets remain closed for the Easter Monday public holiday. Asia stockmarkets, meanwhile, closed mostly lower yesterday.

• U.S. stockmarkets closed mostly lower as the Dow slipped 1.4% amid the concerns over the coming batch of corporate earnings releases that is expected to see earnings being hammered. On the broader market, the S&P 500 fell 1.0%, but the Nasdaq (+0.5%) extended its’ gains for the third straight session, boosted by a late rally.

• European stockmarkets, meanwhile, remain closed for the Easter Monday public holiday

The Day Ahead

• Expectedly, the FBM KLCI remained in the red as market sentiment was battered by the extension of movement control order which offset the higher crude oil prices stemmed from the OPEC and Russia’s agreement to cut production till April 2022. The recent recovery has also led global equities into the crossroad again as investors weighed whether the slew of stimulus packages announced by central banks globally may be able to weather the economic downturn.

• With market conditions turning uncertain again, we reckon that the FBM KLCI may continue its’ downward bias consolidation over the near term. For now, we continue to view the 1,300 psychological level as the key support. Meanwhile, the 1,370 level remain as the immediate hurdle, followed by the 1,400 level.

• After raking in hefty gains over the past couple of weeks, buying momentum amongst the lower liners and broader market shares has overshadowed by the emergence of quick profit taking activities. We think that the pullback may continue as investors offload their recent gains and adopt a waitand-see approach for any fresh developments in regards to Covid-19.

COMPANY BRIEF

• TA Global Bhd has temporarily closed down six of its hotels in Malaysia, Australia, Thailand and in Canada due to the outbreak of the Covid-19 coronavirus which had shut down air travel during the lockdown. This temporary closure is expected to reduce the net cash flow generated by the hotel division in year 2020. The temporary closure of the aforesaid hotels is also one of the measures to protect the health of guests and employees, support social distancing and control costs. (The Star)

• Axiata Group Bhd has settled the US$185.0 mln (RM800.2 mln) demanded by the Nepalese government as outstanding capital gains tax, along with another 990.3 mln Nepalese rupees (RM35.3 mln) in interest, in relation to the group’s purchase of an 80.0% stake in Ncell Private Ltd.

• Axiata made the payment “under protest, and expressly without prejudice” to the position of its unit Axiata Investments (UK) Ltd (Axiata UK) and Ncell in international arbitration proceedings initiated by them against the Nepal government. (The Edge)

• Kejuruteraan Asastera Bhd (KAB) has proposed to transfer its listing to the Main Market of Bursa Malaysia, given it has met the profit track record requirements. The group said has an aggregated consolidated net profit of approximately RM25.8 mln for the past three financial years, which has exceeded the RM20.0 mln profit requirement for a Main Market listing. (The Edge)

• K-One Technology Bhd has joined the growing number of companies venturing into making products that are essential in the fight against the Covid-19 pandemic. It has recently obtained open source design files of a ventilator model released to interested parties by a multinational in the industry.

• It is now studying the ventilator design and intends to build a prototype. It expects to commence manufacturing as soon as permissible, targeting 3Q2020, subject to getting the necessary approvals from the relevant authorities. (The Edge)

• CCK Consolidated Holdings Bhd has proposed a first and final dividend of 1.25 sen a share for the financial year ended 31st December 2019. The entitlement dates and payment dates for the dividend would be announced at a later date. (The Edge)

• AT Systematization Bhd's unit AT Engineering Solution Sdn Bhd will be partnering with China’s Shanghai JieNaXin Mech & Elec Equipment Co Ltd (JNX) to collaborate in building disinfectant chambers to fight against Covid-19. Both parties will pool their knowledge and experience to begin production on anti-epidemic, integrated solutions such as thermometry and integrated disinfection chambers, as well as the localisation of software design and equipment parts of these chambers. (The Edge)  

Source: Mplus Research - 14 Apr 2020