Marred by political uncertainty

Market Review

Malaysia: Despite opening higher at the start of the trading bell, the FBM KLCI (- 0.6%) succumbed to the selling pressure owing to the renewed political developments after an opposition leader made a press conference, which has outshone the additional RM10.0bn stimulus package, dubbed as “Kita Prihatin”. Both the lower liners and broader market also experienced a rough ride.

Global markets: US stockmarkets endured a rout, erasing all their previous session gains as the Dow sank 1.9% after the US Federal Reserve officials highlighted that the Congress would be required to deliver another round of stimulus to support the economic recovery. European stockmarkets, however, were largely higher, while Asia stockmarkets ended on a mixed note yesterday.

The Day Ahead

Following the renewed local political uncertainty, coupled with the dour note set by Wall Street overnight, we see the FBM KLCI to endure further volatility. The selling was more pronounced as foreign funds (YTD: outflow of RM21.65bn) continue to shy away from Malaysia equities. The lower liners and broader market shares will remain under pressure as sentiment turned dour as of late, while investors will be keeping an eye on the FTSE Russell decision on keeping Malaysia in the World Government Bond Index.

Sector focus: We adopt a defensive move; favour the REIT sector that may provide some cushion the volatility. At the same time, the healthcare alongside with the vaccine-related stocks is expected to be more resilient against their peers.

FBMKLCI Technical Outlook

The FBM KLCI failed to build onto its previous session gains as the key index formed a bearish candle to remain below the daily EMA9 level. With the lack of follow-through buying support, the local bourse is expected to remain within the consolidation with resistances located at 1,515 and 1,555. The support, meanwhile are remained at 1,480, followed by 1,450. Indicators have turned negative as the MACD Histogram has turned red, while the RSI remains below 50.

Company Brief

Land & General Bhd aims to launch two new development projects in Shah Alam and Bandar Sri Damansara with a combined gross development value (GDV) of RM677.0m. The Sri Damansara project would be on the Sri Damansara Club land which has been bought over spanning over 14.0-ac of land, comprising 732 units of serviced apartments ranging from 650 sqf to 950 sqf and priced from about RM500,000. Phase 1A of Shah Alam project comprising of 150 units of doublestorey terrace and 162 units of medium-rise Rumah Selangorku apartments. Both projects will kick start in 3Q 2021. (The Star)

Favelle Favco Bhd’s three subsidiaries have bagged RM56.1m in purchase orders for the group's cranes since 27th August 2020. The orders were received from ExxonMobile Exploration and Production Malaysia Inc, TES Inc and Noronha Holdings Pty Ltd (trading as Rhemza Cranes Pty Ltd). ExxonMobile made an offshore crane order with the rest making tower crane orders. (The Edge)

UMW Holdings Bhd's (UMW) subsidiary UMW Toyota Motor Sdn Bhd has succeeded in striking out a suit filed by businessman Deepak Jaikrishnan over three pieces of land in Selangor. Deepak had alleged that UMW Toyota, Boustead Holdings Bhd (with subsidiaries Bakti Wira Development Sdn Bhd and Cebur Megah Development Sdn Bhd), the Federal Land Commissioner and Suntrack Development Sdn Bhd had sought to deprive him of two plots of land in Kapar and Bukit Raja totalling 223.0-ac. (The Edge)

Solution Group Bhd's unit has inked an agreement to market and distribute Covid19 vaccine by CanSino in Malaysia. It will establish a fill and finish facility for the filling, finishing and final quality control of the CanSino vaccine. This facility will be located at its existing premises at Technology Park Malaysia in Bukit Jalil. (The Edge)

Encorp Bhd plans to raise RM5.5m via a private placement to fund its business expansion activities and working capital requirements, as well as to address its public shareholding spread. It will be placing 30.6m shares — representing 10.0% of its share capital — to selected third-party investors. RM3.8m from the placement exercise would be used as working capital, which could be deployed for property development rebranding and marketing for Encorp Strand Mall and staff-related costs. (The Edge)

The Indian Supreme Court has refused to prioritise hearing pleas to allow IHH Healthcare Bhd's open offer for shares in Fortis Healthcare Ltd. The court will hear the issue of the Fortis share sale along with the main case between Daiichi Sankyo and brothers Malvinder and Shivinder Singh. Daiichi Sankyo opposed further sale of Fortis shares to IHH. The court gave Daiichi Sankyo two weeks to give its written response to the petition to allow the open offer for Fortis shares. (The Edge)

WZ Satu Bhd has filed a RM59.2m lawsuit over the failure by its subsidiary to achieve the profit guarantee and shareholders' fund guarantee given in 2014 when the subsidiary was acquired. The group is suing Datuk William Tan Chee Keong, Choi Chee Ken and Pacific Trustees Bhd over WZS BinaRaya Sdn Bhd's failure to achieve the two guarantees stated in the share sale agreement. There were profit shortfall of RM59.2m and shareholders' fund shortfall of RM59.0m during the period of the guarantees. (The Edge)

Source: Mplus Research - 24 Sept 2020