Global political uncertainty woes

Market Review

Malaysia: The FBM KLCI (-1.1%) retreated alongside with the weakness across regional peers as key index slipped below the 1,600 psychological level dragged by rising geopolitical tension between US and China. Consequently, the key index snapped a three consecutive weeks of gains, falling 0.4% WoW, while both the lower liners and broader market were downbeat.

Global markets: US stockmarkets extended their losses as the Dow fell 0.7%, led by the rising tension between US and China, coupled with the weaker-than-expected corporate earnings from Intel and American Express. Both the European and Asia stockmarkets tumbled after China orders to shut US consulate in Chengdu.

The Day Ahead

Following the rising geopolitical tension between the two economic powerhouses, we reckon that the weakness may prolong on the local bourse as investors turned wary particularly after the recent upward swing. As it is, the negative market breadth also suggests that gains could be choppy over the near term.

Sector focus: Amid the renewed market volatility, we see gold-related stocks to be more resilient against the downturn. We also continue to favour plantation sector with CPO prices holding firmly above RM2,700 per metric tonne after the Malaysian Palm Oil Council (MPOC) move to revise upward on prices on the recovery in demand.

With the FBM KLCI failing to build onto previous session’s gains, the key index has now retreated back towards the daily EMA9 level. Still, the FBM KLCI remained within the consolidation band with immediate resistance located at 1,615, followed by 1,630. Supports are pegged at 1,560, followed by 1,530. Indicators have mixed with the MACD Histogram turning red, but remains above the zero level, while the RSI remains above 50.

Company Brief

Dutch Lady Milk Industries Bhd (DLMI) has announced the expansion of its manufacturing capabilities with the acquisition of 32.6-ac. of industrial land in Bandar Baru Enstek, Negeri Sembilan for RM56.8m which it aims to complete in 2020.

Meanwhile, DLMI is a strong partner of the government’s efforts through the Dairy Development Programme and Farmer2Farmer Programme where expert Dutch dairy farmers were specially flown from the Netherlands to transfer skill and knowledge to the local dairy farmers to improve the quality and quantity of local raw milk. (Bernama)

Westports Holdings Bhd’s 2QFY20 net profit declined 19.2% YoY to RM134.3m, impacted by the Covid-19 pandemic curbs. Revenue for the quarter fell 5.0% YoY to RM431.6m. A dividend of 5.05 sen a share, payable on 21st August 2020 was declared. (The Star)

Careplus Group Bhd’s 2QFY20 net profit stood at RM36.2m, from a net loss of RM2.0m recorded in the previous corresponding quarter due to higher glove sales, utilisation rates and selling prices with RM15.4m was registered as one-off gain from a stake disposal, while revenue increased 26.9% YoY to RM118.9m. (The Edge)

Vizione Holdings Bhd’s 4QFY20 net loss stood at RM7.6m, compared to a net profit of RM11.4m recorded in the previous corresponding quarter amid subdued construction activity, while revenue fell 74.0% YoY to RM27.0m. (The Edge)

FGV Holdings Bhd will partner more small and medium enterprise-linked distributors to expand its animal feed and nutrition business, and to penetrate the Malaysian market more effectively. FGV plans to double the number of distributors of such products by the end-2020. It has signed a distributor partnership agreement with My Agro Hub Resources to market an estimated 30 tonnes of formulated animal feed every month.

Separately, the Government has extended Datuk Wira Azhar Abdul Hamid’s tenure as FGV’s chairman effective from 8th September 2020. Azhar was appointed the chairman three years ago on 8th September 2017. (The Edge)

HQ Pack Sdn Bhd has commissioned AME Elite Consortium Bhd to construct its expanded facility in i-Park @ Indahpura. The integrated facility will take up approximately 60,000 sqf of built-up area and would encompass a production factory, cleanroom, warehouse and office block. Targeted completion is slated for the 2H2021. (The Edge)

Newly listed premium jewellery distributor Aurora Italia International Bhd plans to expand its online store to drive growth in 2021 and beyond following its listing on the LEAP Market of Bursa Malaysia Securities Bhd. The company said will focus on diversifying its points of sale to enhance brand awareness and broaden its customer base through e-commerce channels and strategic distribution partnerships with prominent marketing affiliates. (The Edge)

Straits Inter Logistics Bhd is buying one used oil tanker for a cash consideration of RM10.4m to add into its existing nine-vessel fleet that is catered to its marine gas oil trading and oil bunkering services. (The Edge)

Source: Mplus Research - 27 Jul 2020