Still wobbly

Market Review

Malaysia: After enduring a choppy trading session, the FBM KLCI (-0.4%) retreated as gains on glove heavyweights were weighed down by weakness selected banking and telco heavyweights amid the concern over rising cases of Covid-19. The lower liners also retreated despite trading volumes surged to fresh record high with 12.5bn shares exchanging hands, while the broader market finished mixed.

Global markets: US stockmarkets recovered from their intraday losses as the Dow gained 0.03% on expectations over additional stimulus measures, coupled with the strong gains in technology stocks that propel the Nasdaq (+2.5%) to close at fresh all-time high. European stockmarkets finished mostly higher, while Asia stockmarkets ended on a mixed note yesterday.

The Day Ahead

After a pullback yesterday, we think that mild bargain hunting activities will take charge as investors’ risk appetite remains well within the equities market. This is demonstrated by the rising trading activities as of late which may see rotational play to stay firm over the foreseeable future. In the meantime, expectations over further stimulus measures to combat the economic slowdown due to the rising number of Covid-19 cases may provide further boost the recovery.

Sector focus: We see plantation stocks to perform positively amid the rising CPO prices that hit five-months high that is spurred by lower inventory level and improving demand prospects. At the same time, the record closing in Nasdaq may also provide some legs to the technology sector to march higher.

The FBM KLCI managed to trim its losses after coming off from intraday low as the key index remain above the daily EMA9 level. The intraday recovery suggests that quick bargain hunting activities may see the key index to re-test resistance at around 1,615, followed by 1,620 over the near term. In contrast, the support is pegged at 1,560, followed by 1,530. Indicators are still slightly positive as the MACD Line is still above the Signal Line, while the RSI remains above 50.

Company Brief

Kenanga Investment Bank Bhd has terminated a memorandum of understanding (MoU) with Petroliam Nasional Bhd (Petronas) aimed at helping oil and gas contractor list their shares on Bursa Malaysia, citing the lack of development. The MoU would cease to be effective from 19th August 2020. The MoU was a collaboration to help Petronas' vendors launch their initial public offer (IPO) on Bursa Malaysia. (The Star)

IGB Real Estate Investment Trust’s 2QFY20 net profit plunged 75.0% YoY to RM19.5m, mainly due to the rental support provided to tenants and lower car park income arising from the Covid-19 pandemic and resultant movement control order. Revenue for the quarter fell 54.1% YoY to RM62.0m. (The Star)

TA Enterprise Bhd (TAE) has announced that the delay in implementing its takeover offer for an additional stake in its 60.2%-owned unit TA Global Bhd, the circular in relation to the offer and the proposed subscription to shareholders of TAE is now scheduled to be released in mid-November 2020 due to the need for a revaluation on material properties held by the TA Group. (The Edge)

Widad Group Bhd's founder and group executive chairman Tan Sri Muhammad Ikmal Opat Abdullah has further increased his shareholding in the group to 72.0%, after acquiring a 7.6% stake via several open-market and off-market transactions recently. (The Edge)

Supermax Corp Bhd has proposed a bonus share issue of one share for every existing share, involving up to 1.36bn new shares. The bonus issue is expected to double the number of issued shares to 2.72bn. Top Glove Corp Bhd, meanwhile, has proposed a bonus issue of up to 5.48bn new shares on the basis of two bonus shares for one existing unit held. (The Edge)

S&P Global Ratings has assigned Genting Malaysia Bhd's 49.0%-owned New York based casino operator Empire Resorts Inc a "B+" long-term issuer credit rating, "B+" issue-level rating and "3" recovery rating to the company's proposed senior secured notes. The credit ratings were assigned following Empire's plan to issue US$475.0m senior secured notes due 2025 with the proceeds to be used to repay existing bridge loans, fund its debt service reserve account and boost liquidity. (The Edge)

Ikhmas Jaya Group Bhd has appointed Datuk Abdul Majit Ahmad Khan, 74, a former Malaysian diplomat with 34 years of service including roles in the Prime Minister's Department, as well as several Malaysian missions abroad and senior positions in the foreign ministry, as its new independent and non-executive chairman, effective immediately. (The Edge)

Source: Mplus Research - 21 Jul 2020