Still cautious amid political developments

Market Review

Malaysia: The FBM KLCI (+0.5%) rebounded to close higher yesterday alongside with the gains across regional peers, underpinned by gains in Petronas and gloves heavyweights. The lower liners also finished higher, while the broader market ended mixed.

Global markets: US stockmarkets snapped a four-day winning streak as the Dow (- 0.6%); this was pressured by a string of mixed earnings reports, coupled with temporary pause in Johnson & Johnson's COVID-19 vaccine trial. European stockmarkets also closed in red, but Asia stockmarkets finished mostly in green.

The Day Ahead

The FBM KLCI marched higher yesterday as investors as there were no changes in the political agenda in Malaysia. Although the unemployment rate recorded at 4.7% in August 2020 (unchanged from previous month), the number of unemployed person decreased by 3,500, suggesting that the labour market is recovering (albeit gradually). Meanwhile, the continuous rotational play amongst the lower liners provided further room for upsides over the near term.

Sector focus: We continue to like the healthcare sector as the progress for a vaccine development remains clouded by uncertainties. The construction sector is also picking pace as we approach the Budget 2021, which we may anticipate several mega-infrastructure projects being tabled.

The FBM KLCI rebounded as the key index recovered all its intraday losses in the second half of the trading session to close above the daily EMA120 level again. The longer term consolidation is set to remain in place with the immediate resistances at 1,540, followed by 1,555. Meanwhile, the supports are pegged at 1,490, followed by 1,480. Indicators are positive as the MACD Line is approaching the zero level, while the RSI remains above 50.

Company Brief

Reservoir Link Energy Bhd's 60.0%-owned unit Reservoir Link Solutions Sdn Bhd has been awarded a contract for the provision of downhole mechanical heating equipment and services for production operations. The contract, which is on a "call-out" basis with work orders issued at the discretion is effective for two years from 28th August 2020, to 27th August 2022. (The Star)

Top Glove Corp Bhd have hired banks, namely Citigroup, China International Capital Corporation and UBS, to arrange a Hong Kong listing that could raise at least US$1.00bn. No further details were provided as the evaluation is at a preliminary stage and the structure has not been finalised. (The Edge)

GuocoLand (Malaysia) Bhd wholly-owned subsidiary GLM Real Estate Holdings Sdn Bhd has received a notice of assessment for 2016 of RM82.6m, comprising income tax of RM56.3m and a penalty of RM26.3m. This is as IRB considers the gains made by GLM from the disposal of shares in a property subsidiary as chargeable under the Income Tax Act, instead of the Real Property Gains Tax Act. (The Edge)

Tune Protect Group Bhd has appointed Indian national Rohit Chandrasekharan Nambiar as its group CEO, effective 14th October 2020. Rohit, who was the former CEO of AXA Affin Life Insurance Bhd, is filling the post that has been left vacant by Khoo Ai Lin, who resigned on 31st July 2020. (The Edge)

Symphony Life Bhd's wholly-owned unit Prestige Capital Sdn Bhd is planning to sell six parcels of industrial development land in Ulu Langat, Selangor to Perdana Park City Sdn Bhd for RM250.0m, which is more than two-thirds of Symphony Life's market capitalisation. The disposal of the parcels is expected to result in a gain after tax of RM74.2m for the group. (The Edge)

Kanger International Bhd has proposed a private placement of up to 386.97 m shares or 20% of the total number of its issued shares to raise RM68.88 m to third party investors to be identified later. Of this amount, RM34.38 m will be allocated for future viable investment, while RM34.38 m will be used as working capital for existing businesses. (The Edge)

Handal Energy Bhd’s wholly-owned unit Handal Offshore Services Sdn Bhd (Handal Cranes) has received a letter of award from Carigali Hess Operating Company Sdn Bhd for the provision of pedestal crane inspection and maintenance services. The contract is for duration of three years, with an additional two years extension option. (The Edge)

Source: Mplus Research - 14 Oct 2020