Rising The Tide

• The FBM KLCI (+1.5%) advanced alongside with gains across regional equities after U.S. President Donald Trump is considering a gradual reopening of U.S. economic activities. Consequently, the key index climbed 3.7% W.o.W. The lower liners - the FBM Small Cap (+2.6%), FBM Fledgling (+1.9%) and FBM ACE (+1.8%), all extended their gains, while broader market finished higher, anchored by the utilities sector (+2.9%).

• Market breadth remained positive as gainers thumped the losers on a ratio of 764-to-211 stocks. Traded volumes gained 13.9% to 6.31 bln shares amid the positive market sentiment.

• Topping the FBM KLCI winners list was Hong Leong Financial Group (+54.0 sen), followed by Tenaga (+46.0 sen), Hong Leong Bank (+26.0 sen), Petronas Chemicals (+25.0 sen) and KLK (+24.0 sen) advanced on the local bourse. Significant advancers on the broader market were Dutch Lady (+80.0 sen), Panasonic (+70.0 sen), Carlsberg (+50.0 sen), LPI Capital (+50.0 sen) and BAT (+44.0 sen).

• Meanwhile, MPI (-16.0 sen), Advanced Packaging (-7.0 sen), Sungei Bagan Rubber (-4.0 sen), BSL Corporation (-3.5 sen) and Inch Kenneth Kajang Rubber (- 3.5 sen) fell on the broader market. There were only four decliners on the local bourse - Nestle (-70.0 sen), Petronas Dagangan (-44.0 sen), Sime Darby Plantations (-5.0 sen) and IHH (- 1.0 sen).

• Asia benchmark indices rallied amid the positive developments on U.S. economy as the Nikkei (+3.2%) recovered all its’ previous session losses. The Hang Seng Index rose 1.6%, while the Shanghai Composite (+0.7%) extended its gains, brushing off the sluggish 1Q2020 GDP data that contracted -6.8% Y.o.Y, marking the first contraction since 1982. Asia stockmarkets, meanwhile, closed on a positive note on last Friday.

• U.S. stockmarkets continue their ascend as the Dow jumped 3.0% to close above the 24,000 psychological level amid the reports on effective Covid-19 treatment, coupled with White House’s move to relax business closures. On the broader market, the S&P 500 surged 2.7% with all eleven major sectors in the green, while the Nasdaq (+1.4%) also extended its gains.

• Earlier, European stockmarkets - the FTSE (+2.8%), CAC (+3.4%) and DAX (+3.2%), all closed sharply higher, taking cue from the gains across global markets. In the meantime, Eurozone’s inflation rose only +0.7% Y.o.Y in March 2020.

The Day Ahead

• The strong performance on the FBM KLCI was largely driven by news that U.S. will gradually reopen their economic activities which powered the FBM KLCI to close above the 1,400 psychological level. At the same time, the gains are leaving Malaysian stocks increasingly toppish that is likely to prompt a consolidation soon to adjust from overbought, in our view.

• After more than 5% gain over the past two weeks, the key index’s performance has already exceeded all expectations amid the selected institutional support which we think is overdone, considering the still fragile economic prospects. Hence, we think a consolidation is due over the near term with the key index potentially pulling back to the 1,400 level. For now, the resistances are at the 1,420-1,455 levels. Should the 1,400 level fails to hold, the 1,370 level will serve as the next support.

• The lower liners and broader market shares also benefited from the market ascend, but are also looking toppish as a result. Therefore, we think a pullback is also on the cards, which thereafter will provide fresh legs for further recovery.

COMPANY BRIEF

• Bursa Malaysia Bhd has announced that Tan Sri Abdul Wahid Omar will be its new non-executive chairman, following the retirement of Datuk Shireen Ann Zaharah Muhiudeen. Wahid's appointment will take effect on 1st May 2020 as Shireen will be stepping down from her role on 30th April 2020. (The Edge)

• AirAsia Group Bhd is set to resume its scheduled domestic flights, starting with Malaysia on 29th April 2020. This will be followed by Thailand and the Philippines on 1st May 2020, India on 4th May 2020, and Indonesia on 7th May 2020, subject to approval from authorities.

• The resumption of services will first be for key selected domestic routes, it said, which will be increased gradually to include international destinations once the situation improves and governments lift borders and travel restrictions. (The Edge)

• Ageson Bhd, formerly known as Prinsiptek Corp Bhd, is partnering with Singapore firm Navis Marinus Private Ltd (NMPL) to jointly undertake the supply and delivery of sand worth S$107.6 mln (about RM330.4 mln). Ageson's wholly-owned Esa Pile Sdn Bhd and NMPL inked a term sheet today to set up a 51:49 joint venture (JV) company to deliver sand from the Philippines to JTC Corp in Singapore. The three-year contract was awarded to NMPL by JTC Corp, a Singapore government agency in Singapore that spearheads the planning, promotion and development of a dynamic industrial landscape. (The Edge)

• Golden Pharos Bhd’s wholly-owned Permint Plywood Sdn Bhd (PPSB) has obtained approval from the Ministry of Plantation Industries and Commodities to operate during the Movement Control Order (MCO) period. The approval was obtained via the Malaysian Timber Industry Board or MTIB, and that unit must ensure only 50.0% of its workforce is allowed to operate during this period. (The Edge)  

Source: Mplus Research - 20 Apr 2020