Uptick in momentum

Market Review

Malaysia: The FBM KLCI (+1.0%) rebounded yesterday after three straight sessions of losses, powered by gains in gloves heavyweights amid rising Covid-19 cases. Also, the lower liners that are related to glove and healthcare extended their gains, while ten out of thirteen sectors in the broader market finished higher.

Global markets: US stockmarkets tumbled as the Dow (-1.4%) erased all its intraday gains on the lack of stimulus progress (Senate GOP plans to vote on a roughly USD500bn aid package this week), coupled with rising Covid-19 cases that slammed investors’ sentiment.

The Day Ahead

Expectedly, the FBM KLCI rebounded from the three-day slump as investors bargain hunt on beaten down stocks and likely to charge higher today. At the same time, the positive Chinese economic data may also serve as a leading indicator of global economic recovery, should Covid-19 were to be contained over the foreseeable future. The lower liners could have follow through buying support, boosted by the sturdy trading activities as market participants capitalise on the positive market breadth.

Sector focus: We continue to favour the healthcare sector as a proxy to the rising number of new Covid-19 cases across the globe that is not demonstrating any signs of turning back. Meanwhile, automotive-related players may see improved trading interests, taking cue from the 26.4% MoM rise in vehicle sales to 44,666 units in September 2020.

The FBM KLCI snapped a three-day losing streak to recover all its previous session losses, forming a bullish candle to re-test the daily EMA120 level. The bullish candle may signal for a short-term recovery but gains are limited 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 have turned positive as the MACD Histogram has turned green, while the RSI has rose above 50.

Company Brief

ACME Holdings Bhd is unaware of reasons for the unusual market activity (UMA) except for a news report about a possible venture into artificial intelligence solutions and devices. It had recently completed a private placement and two recent acquisitions. (The Star)

Vortex Consolidated Bhd is planning to raise up to RM84.2m via a rights issue and private placement, mainly for repayment of borrowings and working capital. The proposed rights issue will involve the issuance of up to 370.8m rights shares on the basis of one rights share for every one share held on an entitlement date to be determined later. It is also planning for a private placement of up to 156.3m new shares or not more than 20.0% of its total shares. (The Edge)

Tan Chong Motor Holdings Bhd's indirect wholly-owned subsidiary TC Motor Vietnam Co Ltd (TCMV) has inked a Memorandum of Understanding with Xiamen King Long United Automotive Industry Co Ltd to start negotiations to appoint TCMV as the sole and exclusive distributor of the King Long Kingo microbus model in Vietnam. The distribution of King Long microbus models will be for both completely built-up and completely knocked-down versions. (The Edge)

GHL Systems Bhd is offering e-vouchers for screening tests, insurance plans and sanitisation packages to combat the rising number of Covid-19 cases. The group will offer a special discount priced RM220 e-voucher for Covid-19 screening tests, or RT PCR Gold-Standard test, through its tie-up with BP Healthcare Group’s unit Ali Health Sdn Bhd. GHL also announced that it will, together with Shieldcard Holdings, offer AXXESS Covid-19 Protect insurance for as low as RM28.50, with a coverage of three months. (The Edge)

Malaysia Airports Holdings Bhd (MAHB) will install the latest thermal scanner and sneeze guards at 19 airports nationwide as part of its efforts to keep airport guests safe from the spread of Covid-19. A total of 23 new thermal scanners and 600 units of sneeze guards will be installed at all 19 airports. Work is scheduled to be completed by end-October 2020. (The Edge)

Luster Industries Bhd is branching into rubber glove making by teaming up with Fortune Tac Sdn Bhd to set up a new firm called Glovmaster Sdn Bhd. Luster will hold a 56.0% stake in the firm and Fortune Tac the rest. Luster is funding RM50.0m for the new joint venture. A 4,013-sqm piece of land in Banting, Selangor has been identified for the new venture that will house seven double former glove production lines, with an annual production capacity of 2.0bn pieces of nitrile gloves. Operations are expected to start in 3Q2021. (The Edge)

Source: Mplus Research - 20 Oct 2020