Sideways Prevails

• The eleventh hour selling pressure sent FBM KLCI (-0.9%) lower ahead of the mid-week break as the key index erased almost all of its previous gains on Wednesday. However, the lower liners - the FBM Small Cap (+0.5%), FBM Fledgling (+0.3%) and FBM ACE (+0.4%) managed to cling onto their gains, while the broader market ended on a mixed note with the construction sector (- 2.4%) taking the hardest hit on higher operational costs arising from the mandatory Covid-19 screenings for foreign workers.

• Market breadth was indifferent as gainers pipped the losers by 445-to-441 stocks. Traded volumes rose 2.2% to 5.89 bln shares as rotational play continues to take place.

• Asia benchmark indices edged mostly lower as the Hang Seng Index and Shanghai Composite shed 0.7% and 0.3% respectively, despite the latter posted a stronger-than-expected trade data that rose +3.5% Y.o.Y in April 2020. The Nikkei, however, rose 0.3% after resume trading from the Golden Week break. Asia stockmarkets, meanwhile, closed mostly lower on Thursday.

• U.S. stockmarkets rebounded overnight as the Dow gained 0.9% after 3.2 mln Americans filed for unemployment last week - suggesting that the pace of layoffs is tapering. On the broader market, the S&P 500 climbed 1.2%, while the Nasdaq (+1.4%) jumped higher to recover all its year-to-date losses, boosted by gains in FAANGM stocks owing to the resilient demand during the Covid-19 lockdown.

• Major European stockmarkets - the FTSE (+1.4%), CAC (+1.5%) and DAX (+1.4%), all marched higher, after the Bank of England kept key interest rates and its bond-buying program unchanged. Markets also brushed off the sluggish Germany and France industrial production data in March 2020 that sank -11.6% Y.o.Y and -7.3% Y.o.Y respectively.

The Day Ahead

• The late selling pressure on the FBM KLCI suggests that there is lack of buying support over the near term as the key index failed to build onto the gains. The weakness was stemmed by the selling pressure in selected banking heavyweights following Bank Negara’s move to slash interest rate by 50 basis points which also sent the Ringgit weaker against the Greenback.

• With the absence of follow-through buying support, the key index may continue to trade in a sideways manner over the foreseeable future, ranging between the 1,360 and 1,400 levels, which are their immediate support and resistance levels respectively.

• Although the lower liners and broader market shares edged higher, quick profit taking activities are limiting their upside in the interim. Nevertheless, gains are still on the card on the back of the rotational play.

COMPANY BRIEF

• London Biscuits Bhd (LBB) is disposing of RM70.0 mln worth of assets to Pacific Petcare Sdn Bhd as part of the company’s liquidation and to generate cash for the ultimate distribution to its creditors. LBB said it has entered into an asset sale agreement with Pacific Petcare and Mamee-Double Decker (M) Sdn Bhd (as guarantor) for the purposes. The assets to be disposed of included seven parcels of freehold industrial land in Plentong, Johor Baru, together with buildings thereon, plant and machinery located within the premises. (Bernama)

• Bursa Malaysia has resolved not to approve the application of its proposed dividend waiver by Affin Bank Bhd. Affin was looking to revise the quantum of its interim dividend from seven sen to five sen per share for the financial year ended 31st December 2019. In view of Bursa’s decision, Affin has resolved to reinstate the interim dividend to seven sen per share. (The Star)

• Ranhill Holdings Bhd’s wholly owned subsidiary Ranhill Water Services Sdn Bhd has received two contracts, valued at RM2.0 mln and RM4.00 mln respectively by BDB Synergy Sdn Bhd, a wholly-owned subsidiary of Bina Darulaman Bhd.

• The contract is part of the national non revenue water programme. The end client for the contract as stated in the letter of award is the Water, Land and Natural Resources Ministry which will be funded by the federal government. The contracts are to be completed between 12 and 18 months, with the commencement date on 1st April 2020. (The Star)

• TA Enterprise (TAE) has sought the permission of the Securities Commission (SC) to withdraw its takeover offer for unit TA Global Bhd. It was seeking the regulator’s consent after taking into consideration the adverse impact of the Covid-19 pandemic on the financial performance of TA Global following the temporary suspension of operations of several hotels of TA Global in March and April 2020. (The Star)

• Aun Huat & Brothers Sdn Bhd, a major a shareholder in Rubberex Corp Bhd until recently, has exited the company. This came after Aun Huat & Brothers had disposed its entire 25.2 mln shares, or a 10.0% stake in the glove maker in a crossed deal.

• Earlier this week, Rubberex announced that it has placed out new shares in the company at RM1.23 each to raise RM31.0 mln. Proceeds from the fund raising exercise have been allocated for the expansion of its nitrile glove production line. In early April, Rubberex attracted interest following a change in shareholding, which saw the entry of Datuk Ong Choo Meng as the single largest shareholder with a 31.3% stake. (The Star)

• Gunung Capital Bhd has been invited by the promoters of a yet-to-be-issued fullyfledged banking licence in Cambodia to evaluate a proposal to participate. It confirmed that it is in advanced discussions over the proposal, and noted that it was premature to conclude that a listing in Cambodia is the only way for it to unlock the value of such an investment. (The Edge)

• K-One Technology Bhd is venturing into making nasal swabs for Covid-19 tests. It will commence pilot manufacturing on a specific nasal swab design via 3D printing this month. K-One has placed an order with a US-based 3D printing technology developer and manufacturer to supply 3D printers for the nasal swabs. (The Edge)

• Malaysia Building Society Bhd (MBSB) is proposing a lower final dividend of three sen for the financial year ended 31st December 2019, from five sen apiece previously. This new pay-out now translates to RM201.4 mln or 27.3%. (The Edge)

• Westports Holdings Bhd’s 1Q2020 net profit grew 9.2% Y.o.Y to RM152.8 mln, on the back of a tariff hike effective March 2019. Revenue for the quarter gained 14.0% Y.o.Y to RM473.5 mln. (The Edge)  

Source: Mplus Research - 8 May 2020