Momentum steady on KLCI

• The FBM KLCI (+1.2%) recorded its fifth straight winning streak alongside with gains across regional markets boosted by the optimism over reopening of economies across the globe. The lower liners, however, closed mostly lower as the FBM Fledgling and FBM Ace shed 0.5% and 1.0% respectively, while the broader market finished mixed.

• Market breadth turned positive as advancers overpowered the decliners on a ratio of 596-to-428 stocks. Traded volumes fell 6.6% to 9.62 bln shares on mild signs of profit taking in ACE-related stocks.

• Asia benchmark indices extended their gains as the Nikkei (+1.2%) jumped as investors continue to bank of the reopening of economy. The Hang Seng Index rose 1.1% to close marginally below the 24,000 psychological level, while the Shanghai Composite (+0.2) trended higher for the fourth straight session. Asia stockmarkets ended on a buoyant mode yesterday.

• U.S. stockmarkets recovered to fresh three months high as the Dow (+1.1%) extended its gains as investors continue to focus on the reopening economy. Similarly, the S&P 500 (+0.8%) advanced for the third straight session with all eleven major sectors in the green, while the Nasdaq finished 0.6% higher.

• Major European stockmarkets also extended their gains as the FTSE and CAC added 0.9% and 2.0% respectively taking cue from the gains across global markets. Germany’s DAX jumped 3.8%, playing catch up with its neighbors after the extended weekend break.

THE DAY AHEAD

• As expected, the FBM KLCI surpassed the 1,500 psychological level after marching higher alongside with the gains across global markets. As it is, there were no signs of abating and we see the upsides to remain steady over the near term. At the same time, the firmer crude oil and crude palm oil prices also provide some juice to yesterday’s upside.

• With the 1,500 psychological level taken out, we think that the recent streak of buying momentum is likely to sustain for the key index, potentially heading towards the 1,510 and 1,530 resistance levels. The support remains pegged at the 1,460 level.

• Elsewhere, the lower liners and broader market shares remain upbeat as traders continue to build onto their position, capitalising on the recent positive performances. In the meantime, we see more upsides from the oil & gas stocks on the rising crude oil prices, while the plantation stocks may also share some limelight after crude palm oil prices rose above the RM2,300 per tonne level.

COMPANY BRIEF

• Securities Commission has rejected TA Enterprise Bhd's (TAE) application to abort its conditional voluntary offer to take over TA Global Bhd (TAG). TAE's non-interested shareholders will get to decide whether to vote for or against the offer at their EGM.

• TAE on 6th May 2020 submitted an application to ask the SC for permission to withdraw the offer made on 12th February 2020. The stockbroker cited the adverse impact of the Covid-19 pandemic to TAG’s business as the reason for making the application. (The Star)
• Berjaya Sports Toto Bhd’s 3QFY20 net profit stood at RM46.8 mln on top of revenue of RM1.33 bln. No comparisons were made as the group changed the FYE from 30th April to 30th June. (The Star)

• Boustead Plantations Bhd’s 1Q2020 net loss narrowed to RM9.6 mln, from net loss of RM16.2 mln recorded in the previous corresponding quarter on improved prices of palm products. Revenue for the quarter gained 20.6% Y.o.Y to RM162.7 mln. (The Edge)

• DRB-Hicom Bhd is buying the remaining 49.0% equity stake in Media City Ventures Sdn Bhd (MCV) from its controlling shareholder Tan Sri Syed Mokhtar Albukhary for RM100.0 mln cash. The diversified group already owns a 51.0% stake in MCV, which it bought from the tycoon four years ago at the price tag of RM85.7 mln. (The Edge)

• Telekom Malaysia Bhd (TM) and Axiata Group Bhd's unit Celcom Axiata Bhd, as well as units from Maxis Bhd and DiGi.Com Bhd, have been given the 700 megahertz (MHz) band of 5G network by the Ministry of Communications and Multimedia (KKMM). This comes as a surprise to many in the industry who were expecting an open tender process to take place. (The Edge)

• TSH Resources Bhd has reported a fire incident at a factory owned by its wholly-owned subsidiary Ekowood International Bhd. The fire broke out at the factory located in Gopeng, Perak at about 7.50pm on 1st June 2020. The operational impact is not expected to be material to the group as a whole, though the estimated loss is yet to be ascertained. (The Edge)  

Source: Mplus Research - 3 Jun 2020