Market Review

Malaysia: The FBM KLCI (-0.9%) settled down yesterday, dragged by profit taking activities on certain heavyweights following the previous session’s gain, which was mainly driven by optimism over the positive Covid-19 vaccine development. The lower liners gained while the broader market finished mixed.

Global markets: The US stockmarkets ended mixed as the Dow (-0.1%) dipped on the sell off over financials and industrial heavyweights, but the technology stocks rallied, resulted in the increase on S&P 500 (+0.8%) Nasdaq (+2.0%). The European stockmarkets marched higher, while the Asia stockmarkets ended mixed.

The Day Ahead

Expectedly, the FBM KLCI retreated after staging a sharp rally over the course of past 5 trading days. A consolidation is expected to take place over the near term as the FBM KLCI as investors continue to lock in recent gains, which we deem to be a healthy move at current juncture. Meanwhile, we also think that the lower liners will undergo a consolidation with any weakness to be supported by the improved trading liquidity with investors continue their quest to hunt for higher yields.

Sector focus: Following the extended gains in crude palm oil prices, the plantation sector may also charge higher over the near term. Meanwhile, the technology sector may stage a recovery, mirroring the strong gains in Nasdaq overnight.

FBMKLCI Technical Outlook

The FBM KLCI snapped a five-day rally as the key index formed a hammer candle after recovering most of its intraday losses yesterday. With the daily EMA9 level remain well supported, we expect a consolidation to emerge over the near term with upsides to be capped towards the immediate resistances at 1,600-1,615. The immediate supports are at 1,540, followed by 1,520. Indicators remained positive as the MACD Histogram has extended another green bar, while the RSI remains above 50.

Company Brief

Tenaga Nasional Bhd has denied reports suggesting that the utility firm is looking to spin off in its power generation unit. TNB, on 1st October 2020, has completed the reorganisation of TNB Power Generation Sdn Bhd as part of its strategic transformation plan, Reimagining TNB. (The Star)

Focus Dynamics Group Bhd and Brahim’s Holdings Bhd have signed a heads of agreement to work together in a digital kitchen project. Under the plan, Brahim's will use its massive flight kitchen at the Kuala Lumpur International Airport (KLIA) as part of Focus Dynamics' food delivery network. (The Star)

Top Glove Corporation Bhd bought back 8.9m shares from the open market on Wednesday for a total of RM69.9m. The world’s largest glove maker purchased the shares at prices ranging from RM7.71 to RM7.90. Cumulative net outstanding treasury shares totalled 67.706 m units following the recent buy-back. (The Star)

Hong Leong Financial Group Bhd (HLFG) confirmed that it has disposed of 27.0m shares, equivalent to a 10.9% stake in Hong Leong Capital Bhd (HLCAP), in a bid to increase the latter's public shareholding spread. Following the disposal of the shares, HLFG's stake in HLCAP is reduced to 173.8m shares or 70.4%. The shares were disposed of via a private placement but the party or parties involved in the placement exercise were not revealed. (The Edge)

AT Systematization Bhd, whose shares price surged 42.1% or eight sen to 27 sen has reported that its RM22.0m planned acquisition of industrial glove maker Pearl Glove Sdh Bhd has fallen through. Following the purchase cancellation, it will be focusing on building its own glove production capacity via the establishment of a new plant in Perak. (The Edge)

Green Packet Bhd’s 3QFY20 net loss stood at RM6.8m vs. a net profit of RM5.6m recorded in the previous corresponding quarter, dragged down by higher costs incurred for its solutions business and as the company registered higher expenses to strengthen the group's engineering centre of excellence in Chengdu, China. Revenue for the quarter fell 12.4% YoY to RM162.7m. (The Edge)

MRCB-Quill REIT's (MQREIT) 3QFY20 net property income rose 8.9% YoY to RM32.4m, as the property trust registered higher revenue from its real estate assets in Penang and operating expenses decreased. Revenue for the quarter grew 5.7% YoY to RM41.7m. (The Edge)

Sino Hua-An International Bhd (SHIB) has proposed to dispose of PIPO Overseas Ltd for 88.0m Yuan (RM55.0m), which will be used to partially settle an outstanding amount in relation to the group’s acquisition of Touchpoint International Sdn Bhd, as well as partially pay the purchase consideration to Wavetree PLT for intellectual property rights. PIPO owns China-based Yehua, which is involved in the manufacturing and sale of metallurgical coke and other related by products. SHIB had initially invested RM800.0m in PIPO in May 2006. (The Edge)