Recovery in place

Market Review

Malaysia: Tracking the gains on Wall Street overnight, coupled with the higher crude oil prices, the FBM KLCI (+1.3%) recovered all its intraday losses after hovering in the positive territory for the entire trading session yesterday. The lower liners remain upbeat, while profit taking sent the healthcare sector (-0.2%) to underperformed the positive broader market.

Global markets: : US stockmarkets extended their gains overnight as the Dow added 0.7% to mark its fifth straight session of winning streak buoyed by betterthan-expected jobless claims at 1.2m last week vs. consensus forecast of 1.4m. European stockmarkets retreated after Bank of England warned of a slow progress in economic recovery towards pre-Covid-19 levels, while Asia equities ended mixed

The Day Ahead

We see the liquidity driven market with trading volumes at fresh new high to play a key role for further upside on stocks across Bursa Malaysia. Sentiment is also driven by the Ringgit that rose to 5-months high against the Greenback alongside with the higher crude oil prices. At the same time, investors will be keeping an eye on Malaysia’s unemployment rate as a gauge to the economic performance.

Sector focus: We see healthcare-related stocks continue to soar while safe-haven asset-related stocks on course for further upside. The stabilising CPO prices above RM2,700/MT may garner some trading interests within the planation sector play on rising demand from Middle East and Africa.

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

Anzo Holdings Bhd managing director Datuk Chai Woon Chet has made an unconditional mandatory takeover offer (MTO) for restaurant owner Oversea Enterprise Bhd after acquiring 63.4% of the company, comprising 151.3m shares, for RM45.4m or 30 sen a share. (The Star)

AEON Co (M) Bhd's RM142.0m court case levied by Mega Continental Sdn Bhd has been set aside, with judgement in relation to its alleged failure to perform an obligation under a lease agreement with Mega Continental in Alor Setar. The company will be undertaking legal actions against Mega Continental for the loss of income, reputation and unnecessary inconvenience caused to its customers, people and partners. (The Edge)

Advancecon Holdings Bhd inked a memorandum of understanding (MoU) with hypermarket operator Mydin Mohamed Holdings Bhd to develop a 2,344.3kWp rooftop solar power system to be installed at the latter's outlet in Bandar Seremban Utama, Negeri Sembilan. Advancecon will develop the solar photovoltaic system throughout the terms of a supply agreement with renewable energy (SARE) among Mydin, Advancecon Solar and Tenaga Nasional Bhd, with ownership, operation and maintenance of the system to be transferred to Mydin after the expiration of the SARE terms. (The Edge)

Hock Seng Lee Bhd's 2QFY20 net profit dropped 76.0% YoY to RM4.0m, attributed to the height of the Movement Control Order. Revenue shrank to RM83.05 m, from RM175.41 m. (The Edge)

Gas Malaysia Bhd's unit has established Islamic medium-term note (IMTN) and Islamic Commercial Paper (ICP) programmes. Both programmes have a nominal value of RM1.00b each and have a combined issuance limit of up to RM1.00b under the Shariah principle of Muharabah. The IMTN have tenure of 15 years and ICP lasting seven years. (The Edge)

JAG Bhd inked a lease agreement with RH Silver Sdn Bhd to lease 45.3-ha. of land in Manjung in order to bid for the LSS@MEnTARI programme (Large Scale Solar) for a proposed capacity of up to 29MWac. The power plants under the scheme are expected to be operational by end-2023, with the development of each plant taking up to 18 months. JAG is to lease the land for 23 years, including a renewal term of 10 years or a period it agrees upon with RH Silver. (The Edge)

Source: Mplus Research - 7 Aug 2020