Still on the hunt

Market Review

Malaysia: The FBM KLCI (+0.7%) swung back to positive territory in the final two hours of the trading session on last Friday after erasing all its intraday losses, boosted by buying activities from foreign funds. The lower liners also ended higher, while the construction (-0.1%), real estate (-0.2%) and transportation (-0.3%) sectors underperformed the mostly positive broader market.

Global markets: US stockmarkets rallied as the Dow (+0.6%) enjoyed its biggest weekly gain (+3.3% WoW) since early August 2020, fuelled by continued hope on another round of fiscal stimulus prior to the election. European stockmarkets finished mostly higher, while Asia stockmarkets ended on a mixed tone.

The Day Ahead

After two consecutive days of rally (FBM KLCI rallied approximately 40 pts), we reckon that a consolidation may take place at the start of the week as investors would digest recent gains. In the meantime, the recent aggressive move may also tone down in view of the political instability in coming days. On a brighter note, the positive market breadth, coupled with the strong trading volumes in recent days suggests that investors’ appetite remain within the equities market in search for higher yields.

Sector focus: The energy sector has come into focus in light on the higher crude oil prices as of late due to the supply disruption from US. We also favour the technology sector amid the improving demand overtime, whilst gold-related stocks will be triggered by the higher gold prices that rose above US$1,900/oz.

The FBM KLCI recovered all its intraday losses to form another bullish candle as the key index closed above the daily EMA60 levels. After two days of rally, the key index is inching towards the immediate resistance at 1,540, followed by 1,555. On the flipside, the immediate support, remained pegged at 1,490 followed by 1,480. Indicators remained positive as the MACD Histogram has extended another green bar, while the RSI remains above 50.

Company Brief

Focus Dynamics Group Bhd has acquired a substantial stake in ailing in-flight catering firm Brahim's Holdings Bhd. The company has amassed a 12.2% equity interest in Brahim after spending RM7.3m buying 28.8m shares in the open market earlier this week. Focus Dynamics' plans for digital cloud Kitchen services, E kitchen network and other flagship outlets, sees this acquisition as the key step to establish a solid platform of operations to cater for its expansion and growth plans. (The Star)

Top Glove Corp Bhd is considering raising more than US$1.0bn from a listing in Hong Kong. Deliberations are ongoing and details of the offering, including size, could increase depending on investor feedback. (The Edge)

UEM Sunrise Bhd managing director (MD) Anwar Syarin Abdul Ajib, who is also the chief executive officer, tendered his resignation after he had been at the helm for six years. Coincidently, his resignation is at the time when UEM Sunrise’s board is expected to deliberate the proposal made by its controlling shareholder, UEM Group Bhd, to merge with Eco World Development Bhd. On a separate note, UEM Sunrise has entered into agreements to sell 169.8-ac. of land in Johor to AME Elite Consortium Bhd for RM434.3m. (The Edge)

MSM Malaysia Holdings Bhd has appointed Fakhrunniam Othman as acting group chief executive officer (CEO), after axing its former group CEO Datuk Khairil Anuar Aziz earlier this week, when it found his clarification about some accounting adjustments "unacceptable". (The Edge)

XOX Bhd has proposed to undertake a bonus issue of up to 1.34bn free warrants on the basis of three warrants for every eight shares held on an entitlement date to be announced later. Assuming full exercise of 1.34bn warrants at an illustrative exercise price of 16 sen, the company will raise gross proceeds of RM213.8m. The proceeds arising from the exercise will be utilised for working capital, including defrayment of operational and administrative expenses. (The Edge)

WZ Satu Bhd has bagged an RM16.5m contract from AsPac Lubricants (Malaysia) Sdn Bhd, a member of oil and gas BP Group, for the installation works at AsPac’s lubricant blending plant in Port Klang. The duration of the contract is eight months commencing from 1st October 2020. (The Edge)

The trading of convenience store operator MyNews Holdings Bhd's securities will be suspended today, from 9.00am until 12.30pm, pending the release of a material announcement. (The Edge)

Source: Mplus Research - 12 Oct 2020