Lower liners in focus

Market Review

Malaysia: The FBM KLCI (-0.5%) edged down yesterday, dampened mostly by HAPSENG (-3.8%) with two third of the key index components in the red. However, the lower liners continued to rise, while the broader market finished mostly positive, with the exception of the financial (-0.2%) and plantation (-0.7%) sector. On a side note, jewellery counters shine on the back of the record high gold price.

Global markets: US stockmarkets rallied overnight as the Dow jumped 1.4% to close above the 27,000 psychological level on optimism over the Democrats and Republicans will be able to ink the second stimulus bill by end of this week. European stockmarkets also advanced, while Asia equities closed mostly higher.

The Day Ahead

Although the local bourse remained under pressured, the lower liners may continue with their ascending move. We continue to think that the liquidity driven market with trading volumes at fresh record high again may provide further impetus to the lower liners over the near term. Additionally, the positive momentum from Wall Street overnight may permeates into stocks across Bursa Malaysia.

Sector focus: As the US Dollar continues to depreciate against a basket of currencies, coupled with the gold prices staying above US$2,000 level may provide further leeway for gold-related players to march higher. Meanwhile, the Brent oil prices that closed at 5-months high may trigger interests within the energy sector. At the same time, the healthcare and technology sector will remain as the clear frontrunners owing to the robust demand.

The FBM KLCI has formed another hammer candle after recovering most of its intraday losses yesterday. With the lack of follow-through buying support, we continue to see the 1,600 as the immediate resistance, followed by 1,615. The immediate support remains pegged at 1,560, followed by 1,530. Indicators are still weak with the MACD Histogram extended another red bar and remains below the Signal Line, while the RSI is slightly above 50.

Company Brief

Green Ocean Corp Bhd’s proposed private placement of up to 10.0% of its issued shares or 29.0m new shares at 18.5 sen each has lapsed as payment conditions have not been met. The issue price of the placement shares will be re-determined and re-fixed by the board at a later date after all the regulatory approvals had been obtained. (The Star)

Datasonic Group Bhd has proposed a bonus share issue of one share for every existing share, involving up to 2.18bn new shares. (The Edge)

Top Glove Corp Bhd executive chairman Tan Sri Dr Lim Wee Chai claimed that old issues involving forced labour allegations against the company arose lately, due to the work of an activist who intended to “sabotage” the group. Top Glove is trying to find a solution to the matter and the company needs to explain the matter to the US Customs and Border Protection (CBP). The group expects to solve the issue within this month. (The Edge)

KLCC Stapled Group's 2QFY20 net profit fell 22.7% YoY to RM140.5m, due to a sharp decline in the performance of its hotel and retail segments following the implementation of the Movement Control Order (MCO). Revenue for the quarter fell 23.9% to RM267.2m. A second interim income distribution of 7.5 sen per stapled security was declared. (The Edge)

MMAG Holdings Bhd has sold its entire 29.9% stake in MSCM Holdings Bhd to Penang's Hong Seng Group for RM18.1m, and also has sold 75.2m MSCM warrants to another private company, Landasan Simfoni Sdn Bhd, for RM0.8m. (The Edge)

UMW Holdings Bhd’s UMW Toyota Motor sold 7,509 vehicles in July 2020, constituting a YTD high, up 70.0% MoM from the 4,417 units registered in June 2020 due to the sales tax exemption on locally-assembled cars from 15th June 2020 to 31st December 2020. Its 38.0%-owned associate Perodua also noted that July had recorded the highest monthly sales year with 23,303 vehicles, up 9.2% MoM from 21,250 units sold in June. (The Edge)

Caely Holdings Bhd's substantial shareholder Ni Hsin Resources Bhd has disposed of its entire 7.2m shares or 4.3% stake in the former for RM4.4m, with an expected gain of RM0.8m, which will be put towards working capital purposes. Ni Hsin’s total investment cost in Caely from 2017 to 3rd August 2020, stood at RM7.1m. (The Edge)

The trading of Pasdec Holdings Bhd's securities may be suspended from Monday 10th August 2020, if the company does not submit its outstanding 2019 annual report on or before 7th August 2020. (The Edge)

The trading of Oversea Enterprise Bhd’s securities will be suspended today from 9.00am until 5.00pm, pending a material announcement. (The Edge)

Source: Mplus Research - 6 Aug 2020