Mild bargain hunting activities may emerge

Market Review

Malaysia: Despite the overnight recovery on Wall Street, Bursa Malaysia were splashed in the red, contributed by the weakness from healthcare (healthcare suindex plunged 7.98%) related stocks, especially the glove segment and this have translated to the negative sentiment on the lower liners and small caps. The FBM KLCI fell 0.44%, while FBM Small Cap and FBM ACE declined 4.0% and 5.4%, respectively. On a side note, BNM kept the OPR unchanged at 1.75%.

Global markets: Wall Street reversed its intraday gains as broad based selling across the technology stocks were noticed after a day of rebound. For the Dow it was the fourth decline out of five trading sessions; the Dow slipped 1.45% for the day. Also, the higher-than-expected jobless claims, where 884k people (consensus: 850k) filed for unemployment benefits could have contributed partly to the selloffs

The Day Ahead

Given the decline move on Wall Street, we believe the FBM KLCI’s upside could be limited and traders are advice to trade only on those fundamentally sound stocks as both the FBM Small Cap and FBM ACE are trending lower at this moment. Hence, probability of making gains over the near term could be rather limited.

Sector focus: Meanwhile, we expect the sharp bashed down stocks yesterday may be overdone at least for the near term and warrant some bargain hunting activities due to their oversold status; traders may look out for fundamentally solid counters to trade for a small rebound. Also, with the BNM leaving the OPR unchanged, we believe market participants could focus on banking stocks over the near term.

The FBM KLCI has tested the support around 1,480 and closed slightly above 1,490. However, we believe the current trend has turned slightly negative after the key index fell below 1,500 level on Wednesday. We believe there might be mild recovery over the near term, but upside will be limited around 1,500-1,520. Support will be set around 1,480, followed by 1,450.

Company Brief

DRB-Hicom Bhd's 50.1%-owned subsidiary Proton Holdings Bhd has launched its bestselling sport utility vehicle — the 2020 Proton X70 in Brunei on 6th September 2020. Brunei is the first export market for the Proton X70 and is now also the first export market for the upgraded Malaysian-made model from Tanjung Malim. (The Edge)

Gets Global Bhd needs an estimated RM226.0m for its planned diversification into the glove-making business, which will be funded via a combination of bank borrowings and cash. This comprises RM100.0m for the estimated construction cost of a glove-manufacturing plant, and RM126.0m for the fabrication, installation and commissioning of 12 new double-former glove-dipping lines. (The Edge)

Tasco Bhd has received approval from the Malaysian Investment Development Authority for a second round of tax incentive to carry out integrated logistics service activities as an expansion project. The tax incentive will enable the group to enjoy income tax exemption via investment tax allowance of 60.0% of its qualifying capital expenditure incurred within five years. (The Edge)

Top Glove Corp Bhd yesterday bought 14.9m shares in the group at between RM6.12 and RM7.40 for a total sum of RM99.9m. On 9th September 2020, the group repurchased 1.4m units of its own shares for close to RM9.9m. (The Star)

Bermaz Auto Bhd's 1QFY21 net profit dropped 81.7% YoY to RM9.2m, in line with the lower revenue. Revenue for the quarter fell 16.1% YoY to RM448.9m. An interim dividend of 0.5 sen per share, payable on 18th November 2020 was declared. (The Edge)

Tenaga Nasional Bhd (TNB) has declared an interim dividend of 22.0 sen per share for 2QFY20, payable on 14th October 2020. (The Edge)

Radiant Globaltech Bhd is proposing to acquire an 80.0% stake in Grand-Flo Spritvest Sdn Bhd for RM11.6m cash to expand its domestic customer coverage and increase its suite of software and other services to clients. The remaining 20.0% will be held by Jejaka 7 Capital Sdn Bhd, in which Grand-Flo Spritvest's director and chief executive officer Cheng Ping Liong holds a majority equity interest of 55.0%. (The Edge)

Source: Mplus Research - 11 Sept 2020