Pullback In Place

• The FBM KLCI (+2.0%) trended higher for the fourth straight session as the key index closed above the 1,400 psychological level on the back of the positive developments over the Covid-19 vaccine trial. Consequently, the key index rose +4.2% M.o.M in April 2020, marking the biggest monthly gain since July 2018. Likewise, the lower liners - the FBM Small Cap (+1.6%), FBM Fledgling (+1.0%) and FBM ACE (+2.0%), all marched higher, while the utilities sector (-0.2%) underperformed the positive broader market.

• Market breadth stayed positive as gainers outnumbered of the losers on a ratio of 629-to-298 stocks. Traded volumes climbed 21.3% to 5.85 bln shares amid the positive market sentiment.

• Japanese stockmarkets resume trading on a downbeat manner as the Nikkei sank 2.8% following the government’s plans to extend a nationwide state of emergency beyond 6th May 2020. Both the Hang Seng Index and Shanghai Composite were closed on last Friday for the Labour Day public holiday. Asia stockmarkets, meanwhile, were mostly closed on last Friday.

• U.S. stockmarkets extended their losses as the Dow slipped 2.6% to erase all its’ weekly gains as U.S. President Donald Trump threaten to raise tariffs on Chinese goods on speculation that Covid-19 was originated from a laboratory in Wuhan. On the broader market, the S&P 500 sank 2.8% with all eleven major sectors in the red, while the Nasdaq finished 3.2% lower.

• Earlier, European stockmarkets - the FTSE (-2.3%), CAC (-2.1%) and DAX (- 2.2%), all ended in the red after the European Central Bank kept interest rates unchanged. Market sentiment turned downbeat after Spain reported preliminary 1Q2020 GDP data contracting -4.1% Y.o.Y, whist France’s preliminary 1Q2020 GDP data sank -5.8% Q.o.Q.

The Day Ahead

• It was a stronger-than-expected performance that powered the FBM KLCI to end sharply higher in April 2020 alongside with the gains across regional peers as foreign funds turned net buyers for the first time in more than two weeks. The positive sentiment also spilled over towards the broader market as gains were evident in the technology stocks that was boosted by the resumption of production in full capacity.

• After racking more than 4.0% gains over the last month with the key index tethering near the overbought zone, a consolidation is in store. The barrage of sluggish economic and renewed trade tension between U.S. and China may also serve as an excuse for the profit taking activities. For now, we think that pullback will be mild with key support located towards the 1,380 and 1,360 levels respectively. On the upside, gains are likely to be capped towards 1,430 level, followed by the 1,460 level, should the 1,400 psychological level continue to hold.

• The lower liners and broader market shares may see continuous rotational play on the back of the improved market undertone. However, market condition may turn cautious as we enter into the quarterly financial reporting month with corporate earnings, in general likely to be dour.

COMPANY BRIEF

• Digi.com Bhd (Digi) will invest in the leading network solutions to enable future technologies such as the fifthgeneration (5G), artificial intelligence (AI) and internet of things (IoT). The group has re-farmed its spectrum to deliver stronger indoor and outdoor coverage and improved network capacity.

• The group has also partnered with Telekom Malaysia Bhd (TM), in line with the National Fiberisation and Connectivity Plan (NFCP)’s aspiration to provide quality and affordable connectivity for more Malaysians across more areas nationwide. (Bernama)

• George Kent (M) Bhd’s 4QFY20 net profit dropped 65.6% Y.o.Y to RM6.8 mln, attributed to a poorer performance in the engineering division and unrealised losses on foreign exchange of RM1.9 mln. Revenue for the quarter decreased 28.6% Y.o.Y to RM82.4 mln.

• For FY20, cumulative net profit slipped 51.8% Y.o.Y to RM41.6 mln. Revenue for the year dropped 22.2% Y.o.Y to RM335.8 mln. (The Star)

• SC Estate Builder Bhd’s independent and non-executive chairman Datuk Cheng Lai Hock has resigned due to personal commitments. Managing Director Loh Boon Ginn will be taking over as executive chairman. Loh is a substantial shareholder of the group via SC Estate World Sdn Bhd, which holds a 10.8% stake in the company. His sister Loh Shy Ming is a nonexecutive director of SC Estate Builder, while another sister, Loh Shy Tyug, is a non-independent and nonexecutive director. (The Edge)
• Amanahraya REIT announced Abdul Aziz Abdul Rasheed had been appointed as its new chief executive officer, some 15 months after Zalila Mohd Toon had vacated the position on 31st January 2019. Prior to joining Amanahraya REIT, Abdul Aziz, 44, was senior manager (investment projects) in AREA Management Sdn Bhd. He was also the head of engineering at AXIS REIT Managers Bhd between May 2013 to February 2017. (The Edge)

• Bursa Malaysia Bhd’s 1Q2020 net profit rose by 38.1% Y.o.Y to RM64.7 mln on growths in trading revenue and derivative market trading revenue, following a higher trade volume. Revenue for the quarter grew 19.1% Y.o.Y to RM150.8 mln. (The Edge)

• Boustead Holdings Bhd ushered in former Johor Menteri Besar Datuk Seri Mohamed Khaled Nordin as its new independent and non-executive chairman, nine months after the position was left vacant by former chairman General Tan Sri Panglima Mohd Ghazali Che Mat (who retired on 31st July 2019).

• As Johor Menteri Besar from 2013 to 2018, Mohamed Khaled was also chairman of Johor Corp Bhd. He was also Minister of Higher Education from 2008 to 2012, Minister of Entrepreneur and Cooperatives Development from 2004 to 2008 and Deputy Minister of Works from 1990 to 2004. (The Edge)

• Capitaland Malaysia Mall Trust (CMMT) has committed to RM35.0 mln in rental relief for shopping mall tenants in nonessentials services during the Movement Control Order (MCO). This is inclusive of the 14-day rental waiver implemented during phase one of the MCO from 18th March 2020 to 31st March 2020, and the government’s provision of a 15% discount on electricity tariffs. (The Edge)

• DWL Resources Bhd has reported that Datuk Shahril Mokhtar has resigned as its managing director after a year on the job, citing “personal and other commitments”. The market talk is that the former Prasarana Malaysia Bhd managing director and Mass Rapid Transport Corp Sdn Bhd (MRT Corp) chief executive officer may return to helm MRT Corp. (The Edge)

• JAG Bhd’s unit Jaring Metal Industries Sdn Bhd (JMI) has received approval from the Ministry of International Trade and Industry to operate during the MCO. It had received the letter on 19th April 2020 and was allowed to resume its operations on 22nd April 2020. As part of the approval, JMI must adhere to MITI’s standard operating procedures during the MCO. (The Edge)  

Source: Mplus Research - 4 May 2020