Market Review 

Malaysia: Strong bargain hunting activities have sent the FBM KLCI (+2.5%) to reverse its negative performance during the MSCI rebalancing dips and the key index closed above the 1,600 psychological level, in line with its regional peers. The lower liners climbed, while the broader markets finished higher with the exception of healthcare (-0.6%) and REIT (-0.7%) sectors.

Global markets: US stocks rose as the Dow (+0.6%) gained, while S&P500 (+1.1%) Nasdaq (+1.3%) hit fresh records, ignited by economic recovery hopes following Pfizer and BioNTech's application for regulatory approval for their coronavirus vaccine in the European Union. Both the European and Asia stockmarkets also ended in the green.

The Day Ahead

The FBM KLCI performed a swift recovery as the key index recouped most of its previous session losses to re-claim the 1,600 psychological level. We reckon some stability will ensue with further upsides are in the cards as investors continue to focus on the economic recovery progress. Meanwhile, we believe that the lower liners will continue to enjoy their upward momentum as liquidity remains well on the equities market with investors capitalising on the positive market sentiment.

Sector focus: India’s move to reduce the import duty for crude palm oil (CPO) bodes well for the plantation sector as CPO prices remain firm above RM3,300/MT. Meanwhile, we continue to like the construction sector as a prime beneficiary under Budget 2021 as construction activities shift into higher gear.

FBMKLCI Technical Outlook

The FBM KLCI gapped up to hover in the positive territory as the key index formed a bullish harami candle to recover most of its previous session losses. With the key index now back above the daily EMA9 level as well as the 1,600 psychological level, we think that further upsides will be on the table towards the next resistance at 1,615, followed by 1,640. Meanwhile, the supports are at 1,560, followed by 1,540. Indicators have turned positive as the MACD Histogram has turned green, while the RSI has recovered above 50.

Company Brief

Malaysia had opened an investigation and would take legal action against world's largest glove manufacturer, Top Glove Corp Bhd after finding that the firm did not comply with standards for worker accommodations. The Ministry of Human Resources' Labour Department has announced that enforcement operations were carried out last week at six of Top Glove's companies in five states, investigating conditions at worker accommodations and hostels. Investigators found the accommodations to be cramped, uncomfortable, to have poor ventilation and to lack rest and kitchen areas. (Reuters)

Sime Darby Bhd is divesting its entire interest in three joint venture companies operating three river ports in Jining in the Shandong Province, China for a net amount of 293.9m Yuan (RM181.6m), to be realised over three years. The agreements the conglomerate has entered into allow for a staggered exit from its investment in the three Jining ports over three years and are very much in line with its strategy to divest non-core assets. (The Edge)

Uzma Bhd's unit Setegap Ventures Petroleum Sdn Bhd has secured a one-year contract from SEA Hibiscus Sdn Bhd for the provision of integrated well services. The letter of award for the work order, dated 20th November 2020, has been received, though it did not disclose the contract sum. (The Edge)

Sarawak Oil Palms Bhd (SOPB) plans to acquire two parcels of land in Miri for RM11.5m to construct a corporate office. SOPB plans to construct a corporate office which will allow the consolidation of the rented offices currently situated in various locations. (The Edge)

Berjaya Auto Alliance Sdn Bhd, that is 51.0% owned by Berjaya Corp Bhd and 20.0% owned by Bermaz Auto Bhd has been awarded the sole rights to distribute new Peugeot vehicles in Malaysia. The company has also won the rights for aftersales services and spare parts distribution for Peugeot Citroen and DS vehicles. (The Edge)

Samaiden Group Bhd has won the bid to develop a 1.2MW biogas power plant in Bachok, Kelantan; its second power plant contract for the month of November 2020. The project is expected to be completed by 17th November 2023, which is the scheduled feed-in tariff commencement date, being the date whereby the project is expected to sell the electricity generated to the power grid. From the commencement date, SC Green will hold the feed-in tariff for 21 years for a tariff rate of RM0.3963/kWh. (The Edge)

UWC Bhd’s 1QFY21 net profit jumped 93.5% YoY to RM21.7m, boosted by stronger demand in both its semiconductor and life science businesses as it is also involved in the Covid-19 test equipment supply chain. Revenue for the quarter gained 52.4% YoY to RM71.5m. (The Edge)

The Securities Commission Malaysia (SC) has approved UEM Sunrise Bhd's application for an extension of time to announce the takeover offer with regard to its proposed merger with Eco World Development Group Bhd (EcoWorld). The SC has now given UEM Sunrise until 31st January 2020 to make its announcement on the matter. SC wants UEM Sunrise and EcoWorld to decide by 2nd January 2020 on whether to proceed with discussions in relation to the proposed merger and they must jointly submit an application for a final extension of time based on a timeline as agreed by the boards of directors. (The Edge)

Source: Mplus Research - 2 Dec 2020