Rebound in store

Market Review

Malaysia: The FBM KLCI slipped 0.7% to end lower for the week as the key index recorded its third straight decline led by Petronas-related and selected telco heavyweights. The lower liners, however, ended in green following 8.7bn shares exchanging hands across Bursa Malaysia; the highest since 2nd September 2020. Meanwhile, the broader market ended mostly in the negative territory.

Global markets: US stockmarkets finished mixed as the Dow (+0.4%) and S&P 500 (+0.01%) climbed on stronger-than-expected retail sales growth (+1.9% MoM) in September 2020 and further clarity on vaccine development timeline, but Nasdaq (- 0.4%) closed lower. European stockmarkets closed in the green, while Asia stockmarkets ended on a mixed tone.

The Day Ahead

After three consecutive days of pullback, we reckon that a rebound is in store as investors bargain hunt on beaten down stocks. The upcoming release of China 3Q2020 GDP data may serve as a leading indicator to the pace of global economic recovery with only double digits of new daily cases reported since April 2020. Meanwhile, trading activities remain relatively robust will ensure the rotational play remain in place under the prevailing low yield environment.

Sector focus: With the number of new worldwide cases reported daily remain on the higher note against historical average; we reckon that the healthcare sector dealing with PPE and vaccine developments will be kept busy. The technology sector will also remain in a sweet spot premised to the relatively robust demand.

The FBM KLCI has extended its losses as the key index formed another bearish candle to remain below the daily EMA20 level. The extended weakness may warrant some bargain hunting activities but any gains are capped towards the immediate resistances at 1,530, followed by 1,540. On the flipside, the immediate support is located at 1,490, followed by 1,480. Indicators remained negative as the MACD Histogram has extended another red bar, while the RSI remains below 50

Company Brief

Digi.com Bhd’s 3QFY20 net profit rose 11.5% YoY to RM320.8m, fuelled by increased uptake of relevant digital services and improved data monetisation opportunities. Revenue for the quarter gained 5.4% YoY to RM1.37bn. A dividend of 4.1 sen a share, payable on 17th December 2020 was declared. (The Star)

Mah Sing Group Bhd will be spending up to RM150.0m in capital expenditure for the first phase of its proposed rubber glove venture, which will be funded via internal funds, bank borrowings and sukuk issuance. It entails the purchase of 12 new glove production lines and other plant and machinery such as boilers, chillers, compressors and wastewater treatment plant, as well as the refurbishment work of a warehouse in Klang. (The Edge)

Brem Holdings Bhd is buying six parcels of leasehold industrial land in Serendah, Selangor for RM68.3m to replenish its land bank. The vacant plots measure 528,439 sqm in total and are located near the Sungai Buaya interchange and toll plaza on the North-South Expressway. (The Edge)

FGV Holdings Bhd has expanded its bulking facility by adding six new vegetable oil storage tanks to cater for increasing market demand and to fulfil the government's B20 biodiesel mandate for the transport sector. (The Edge)

Fitch Ratings has downgraded the long-term issuer default ratings of Genting Bhd and its wholly-owned subsidiaries Genting Overseas Holdings Ltd and Resorts World Las Vegas LLC (RWLV) to 'BBB' from 'BBB+', with a stable outlook. The downgrade reflects Fitch's expectation that recovery from the Covid-19 pandemic will be slower than initially forecast, in particular for Singapore. (The Edge)

AirAsia Group Bhd is implementing GE Aviation’s Network Operations Insights (NOI) platform across the budget airline’s operations to help reduce flight disruption impact and save cost. The NOI platform will enable airline operations managers to make data-driven decisions as operations change in real time. (The Edge)

Parkson Holdings Bhd’s 55.0%-owned subsidiary Parkson Retail Group Ltd has entered into an agreement with Hongxiang Real Estate Co Ltd to establish a joint venture to jointly locate suitable land resources within Jiaxing city of Zhejiang province in China for future development and construction of properties on such land resources. (The Edge)

AWC Bhd has bagged a contract to provide management maintenance and operational services at a commercial office building in Putrajaya called Galleria PJH from Putrajaya Holdings Sdn Bhd. The contract, valued at RM6.5m, is valid for three years starting 1st November 2020, with an option to extend for another two years for a sum of RM4.3m. (The Edge)

Source: Mplus Research - 19 Oct 2020