Finding stability

Market Review

Malaysia: The FBM KLCI (+0.4%) flirted between positive and negative territory before ending the session higher, driven by bargain hunting activities in selected healthcare (IHH) and consumer products and services (Nestle) heavyweights. The lower liners ended mixed, while the broader market closed mostly in green.

Global markets: US stockmarkets closed higher as the Dow (+0.5%) climbed on the back of House Speaker of the US, Nancy Pelosi’s positive comment on the potential fiscal stimulus deal as well as lower-than-expected jobless claims last week. European stockmarkets closed mostly in red, while Asia stockmarkets ended mixed.

The Day Ahead

The FBM KLCI endured a choppy trading session before bargain hunting activities took charge, powering the key index higher yesterday. For now, we reckon that the local bourse may attempt to find stability with nibbling on beaten down stocks. Although the prevailing negative market sentiment is deterring investors to take large positions, the lower liners may continue to see rotational play, boosted by the higher than historical average trading activities.

Sector focus: We believe the technology sector will remain in a prime position to march higher ahead of the upcoming batch of corporate earnings releases next month. The recent recovery in CPO prices that climbed for the third straight session to close above RM2,900/MT may provide some trading opportunities within the plantation sector.

The FBM KLCI has recovered all of its intraday losses to form a hammer candle but remained below the daily EMA9 level. A potential recovery is expected to take place over the near term with immediate resistances located at 1,520, followed by 1,530. In contrast, the immediate support is at 1,480, followed by 1,475. Indicators remained negative as the MACD Histogram has extended another red bar, while the RSI is hovering below 50.

Company Brief

Pavilion Real Estate Investment Trust's (REIT) 3QFY20 net property income (NPI) declined 33.2% YoY to RM91.1m due to the non-renewal of some expired tenancies and the deferment of rent commencement dates for some tenants due to movement restrictions imposed to combat Covid-19. Revenue for the quarter decreased 19.5% YoY to RM144.4m. A distribution per unit (DPU) of 1.13 sen, was declared. (The Edge)

MMC Corp Bhd is reviving an initial public offering plan for its port assets, which could be the biggest listing in Malaysia since 2012. MMC is seeking to raise about US$1.0bn from the first-time share sale is in talks with potential advisers and a listing could take place as early as the end of 2021. (The Edge)

Bursa Malaysia Securities Bhd has publicly reprimanded FSBM Holdings Bhd and six of its directors for failing to issue the company's annual report for the financial year ended 30th June 2018 within the stipulated time frame. The six directors of the information technology service and system provider have also been slapped with a collective fine of RM375,600. (The Edge)

Malaysia Airports Holdings Bhd (MAHB) has gone ahead to initiate a lawsuit against AirAsia X Bhd (AAX) to demand the payment of an owed sum, saying the action is necessary to best protect its interest. Malaysia Airports (Sepang) Sdn Bhd filed the suit at the High Court over outstanding aeronautical charges of RM78.2m. (The Edge)

AirAsia Group Bhd has secured a loan as part of its ongoing capital raising plans. The airline took the loan from Sabah Development Bank Bhd and that it would tide the airline over for two months, financing local operations. (The Edge)

DiGi.Com Bhd's largest shareholder, Norway-based Telenor Group has reported that its Malaysian business had witnessed increasing macroeconomic pressure that impacted customer intake and monetisation opportunities, and also resulted in down selling of subscriptions with smaller packages in the post-paid segment. In addition, continued border closures and travel restrictions in response to the Covid19 pandemic continued to impact DiGi's roaming revenue. (The Edge)

Eupe Corp Bhd's 2QFY21 net profit gained 56.9% YoY to RM16.2m, underpinned by strong contributions from its property division. Revenue for the quarter climbed 53.4% YoY to RM121.5m. (The Edge)

Source: Mplus Research - 23 Oct 2020