Market Review

Malaysia: The FBM KLCI (-0.4%) dipped on continued profit taking activities last Friday due to concerns over Covid-19 vaccine supply after Pfizer’s announcement on its vaccine supply chain issue. The lower liners ended mixed, while the energy sector (+7.1%) outperformed the slightly positive broader market given the firmer Brent oil price.

Global markets: The US stockmarkets finished in the positive territory as the Dow (+0.8%) gained for the fourth trading session, spurred by Democrat leader Pelosi’s optimism in the ongoing stimulus talks. European stockmarkets finished in the green, while the Asia stockmarkets also closed mostly higher.

The Day Ahead

We believe that the pullback owing to the mild profit taking is healthy to allow for some gains to be digested with the recovery trend still intact at current juncture. Tracking the gains on Wall Street on last Friday, coupled with the higher commodity prices (both crude oil and crude palm oil), further upsides are largely in the cards. The relaxation of CMCO measures also bodes well the economic growth. The lower liners are also expected to trend higher amid the liquidity driven market, though some toppish signs are returning to the fore.

Sector focus: We continue to favour the plantation sector following the sharp rally in CPO prices, whilst the higher crude oil prices (Brent oil nearing US$50) may continue to attract trading activities within the energy sector. Meanwhile, the lifting of interstate travel ban will provide some impetus to the tourism-related stocks.

FBMKLCI Technical Outlook

The FBM KLCI was traded mostly in the negative territory as the key index staged a mild pullback to remain above the daily EMA9 level. As the recovery momentum is still at large, further upsides will be located towards the next resistance at 1,640, followed by 1,670. Meanwhile, the supports are at 1,600, followed by 1,580. Indicators stayed positive as the MACD Histogram has extended another green bar, while the RSI remains above 50.

Company Brief

MyEG Services Bhd (MyEG) concession agreement for provision of E-Government Services has been extended for three years from 23rd May 2020 to 22nd May 2023. The services include electronic delivery of vehicle registration, driver and vehicle licensing and payment of summonses. The extension is expected to contribute positively to earnings and net assets per share of the company for the financial year ending 31st December 2020 and thereafter. (The Star)

Gamuda Bhd’s subsidiary Gamuda Water Sdn Bhd's vehicle Glacier Assets Bhd has proposed to issue RM630.0m worth of senior notes, which will be backed by receivables due from Syarikat Pengeluar Air Sungai Selangor Sdn Bhd (SPLASH). Glacier was set up by Gamuda Water to monetise the balance of receivables due under the termination and settlement agreement between Pengurusan Air Selangor Sdn Bhd (Air Selangor), SPLASH and Gamuda Water. RAM Rating Services Bhd has assigned a preliminary rating of AAA/Stable to the RM630.0m senior notes, which will be issued under Glacier's RM800.0m asset-backed medium-term notes facility. (The Edge)

Genting Malaysia Bhd’s (GenM) Resorts World Casino New York City (RWNY), New York’s largest taxpayer, said it has generated more than US$3.00bn for New York Lottery's education fund since opening in 2011. (The Edge)

Widad Group Bhd’s wholly-owned subsidiary Widad Builders Sdn Bhd (WBSB) has secured from the Marine Department Malaysia, a RM21.4m contract involving the management and maintenance of the Kuala Perlis, Kuala Kedah and Langkawi’s Kuah passenger jetty and terminal for five years. The contract period commences from 1st January 2021 to 31st December 2025. (The Edge)

The Employees Provident Fund (EPF) reported the sale of another 7.4m shares in Top Glove Corp Bhd on 1st December 2020 via four transactions, without disclosing the prices. Following the latest disposals, the EPF is now left with 458.8m shares or a 5.7% stake in the glove manufacturer. (The Edge)

Yong Tai Bhd has entered into a heads of agreement with China-based Shenzhen Kangtai Biological Products Co Ltd (SZKT) for a proposed collaboration on the development and exclusive commercialisation of the latter's inactivated Covid-19 vaccine (vero cells) in Malaysia. Under this collaboration, Yong Tai will be SZKT's partner in Malaysia to conduct Phase III clinical trials and exclusive commercialisation of the vaccine. Upon the successful conclusion of the Phase III clinical trial or emergency usage approval being obtained in Malaysia, whichever is earlier, the parties plan to cooperate on a vaccine procurement programme of 100.0m doses of the vaccine over a five-year period, of which the committed quantity for the first three years shall be not less than 20.0m doses per annum. (The Edge)

Source: Mplus Research - 7 Dec 2020