Still Higher, But Turning Cautious

• Tracking the positive performance on Wall Street overnight, the FBM KLCI (+1.5%) trended higher for the seventh straight session to close at four-months high as buying momentum re-emerged on glove-related stocks. The lower liners - the FBM Small Cap (+1.1%), FBM Fledgling (+1.6%) and FBM ACE (+3.9%), all rebounded, while the broader market finished mostly higher led by the healthcare sector (+5.9%).

• Market breadth stayed positive as advancers overtook the decliners on a ratio of 634-to-389 stocks. Traded volumes tapered 13.1% to 8.19 bln shares as investors turned cautious following the recent extended rally.

• Asia benchmark indices finished higher after enduring a choppy trading session as the Nikkei (+0.4%) extended its gains on the stronger U.S. Dollar against the Japanese Yen. The Hang Seng Index added 0.2%, but the Shanghai Composite snapped a five-day winning streak to close 0.1% lower. Asia stockmarkets, meanwhile, ended mostly higher yesterday.

• U.S. stockmarkets finished on a mixed note overnight after enduring a choppy spell as the Dow (+0.1%) recorded its fourth straight winning streak, largely thanks to gains in Boeing Co (+6.4%) amid the slight increase in number of workers filing for unemployment benefits last week. On the broader market, S&P 500 (-0.3%) snapped a four consecutive sessions of gains, while the Nasdaq finished 0.7% lower.

• Earlier, European stockmarkets - the FTSE (-0.6%), CAC (-0.2%) and DAX (- 0.5%), all reversed some of their previous session sharp gains ahead of the European Central Bank (ECB) decision. After the close, the ECB opted to expand its pandemic emergency purchase program by €600.0 bln, an amount larger than the €500.0 bln consensus and would reinvest the proceeds of maturing securities and extended the expiration date of the program.

The Day Ahead

• It was another solid performance on the key index boosted by the resumption of buying momentum in glovemakers stocks, coupled with the FBM KLCI’s midterm review. Moving forward, investors would keep an eye on the upcoming on the Short-Term Economy Recovery Plan that is scheduled at 3.00pm today, which could provide additional measures to combat the economy slowdown over the next six months.

• With the 1,560 resistance level taken out, the key resistance now will be located at the 1,580 and 1,600 levels respectively. Although we think the key index would inch higher as it is supported above 1,500 level, we suggest that traders to trade cautiously amid the steep overbought signal on the momentum oscillators.

• The lower liners and broader market shares may see continuous rotational play amid the improved market undertone. Although there were few signs of pullback as yet, we think that gains will be measured as we approach the extended weekend break.

COMPANY BRIEF

• Cypark Resources Bhd is planning to issue up to RM500.0 mln Islamic medium term notes with no maturity date (Sukuk Musharakah), as it seeks fresh funds for its renewable energy projects. Proceeds from the proposed issuance of the perpetual Sukuk Musharakah will be utilised by wholly owned Cypark Renewable Energy Sdn Bhd to refinane existing borrowings, capital expenditure and working capital. (The Star)

• UMW Holdings Bhd has appointed Azmin Che Yusoff as its acting president & Group CEO with effect from 5th June 2020 until further notice. The board is carrying out the process of selecting a replacement for the two positions after they became vacant following the passing of Badrul Feisal Abdul Rahim. Azmin was formerly the group’s chief operating officer and group chief financial officer till his retirement on 30th June 2019 and resumed service on 1st April 2020 as the chief operating officer (corporate) to facilitate the execution of selected special projects and key initiatives under the group’s transformation agenda. (The Edge)

• Media Prima Bhd has confirmed a possible staff layoff as it expedites the next phase of its business transformation that will include revising revenue models and corresponding cost management. Media Prima is expected to carry out a second retrenchment exercise that will affect some 300 staff by September 2020. (The Edge)

• Press Metal Aluminium Holdings Bhd’s 1Q2020 net profit fell 10.9% Y.o.Y to RM102.6 mln on lower aluminium prices. Revenue for the quarter retreated 15.7% Y.o.Y to RM1.83 bln. A first interim dividend of one sen per share was declared. (The Edge)

• UWC Bhd’s 3QFY20 net profit rose 65.4% Y.o.Y to RM14.6 mln on the back of stronger demand from semiconductor customers globally. Revenue for the quarter increased 45.7% Y.o.Y to RM55.8 mln.

• For 9MFY20, cumulative net profit rose 49.5% Y.o.Y to RM39.1 mln. Revenue for the quarter gained 61.8% Y.o.Y to RM157.6 mln. (The Edge)

• Bintulu Port Holdings Bhd’s subsidiary has awarded a RM50.8 mln contract for maintenance dredging work at Bintulu port. Wholly-owned Bintulu Port Sdn Bhd awarded the contract to East Marine Works Sdn Bhd. The duration of the contract is four months. (The Edge)

• AirAsia Group Bhd is evaluating proposals for raising capital to strengthen its equity base and liquidity. It said it has been presented with proposals from investment bankers, lenders and potential investors to help the airline weather the storm caused by the coronavirus pandemic.

• It also has ongoing deliberations with a number of parties for joint-ventures and collaborations that may result in additional investments in specific segments of the group's business. The airline made the statement in response to a report that AirAsia was in talks to sell a 10.0% stake to South Korea's SK Holdings through a private placement. (The Edge)  

Source: Mplus Research - 5 Jun 2020