Still eyeing 1,600

Market Review

Malaysia:. The FBM KLCI (-0.5%) snapped a seven-day rally on quick profit taking activities with the key index lingered mostly in the negative zone yesterday. The lower liners remained mixed, while broader market closed mostly lower with the plantation sector (-1.4%) taking the worst hit as CPO prices retreated.

Global markets:. The US stockmarkets rallied overnight as the Dow jumped 1.6% as earnings season kicked off with a string of better-than-expected results and weekly jobless claims last week at 293,000 was the lowest since March 2020. European stockmarkets were upbeat, while Asia stockmarkets finished mostly higher.

The Day Ahead

The FBM KLCI took a breather following a seven-day winning streak, as the key index retreated from the 1,600 psychological level on the back of profit taking activities. However, tracking the strong gains from Wall Street overnight, we expect local equities to gain momentum and investors could focus on the upcoming Budget 2022 beneficiaries, which we anticipate some goodies to be revealed for construction, telecommunication, and solar sectors. Commodities wise, the CPO price declined after a surge in the previous session, while the crude oil price rebounded above the USD84 per barrel mark.

Sector focus:. The pullback in CPO price and plantation counters may offer buying opportunities in the sector considering the higher demand and tight supply situation. Besides, the firmer crude oil price should bode well for the energy sector and the technology stocks may track the overnight rally in Nasdaq.

FBMKLCI Technical Outlook

The FBM KLCI pulled back from the 1,600 psychological but still hovering firmly above the SMA200 level. Technical indicators remained positive as the MACD Histogram has extended a green bar, while the RSI is slightly below the 70 level. The resistance is pegged along 1,605-1,620, while the support is located around 1,580, followed by 1,550.

Company Brief

LPI Capital Bhd's 3QFY21 net profit grew 22.3% YoY to RM105.4m, underpinned by a strong underwriting result from its insurance unit and higher dividends from investments. Revenue for the quarter increased 8.1% YoY to RM427.9m. (The Star)

Kerjaya Prospek Group Bhd’s unit has accepted a letter of award for a RM258.0m residential project in Plentong, Johor from Teguh Harian Build-Tech Sdn Bhd. Kerjaya Prospek (M) Sdn Bhd secured the contract for the main building works for the project which covers the construction of main building works for three blocks of apartment. Construction is expected to start on 1st November 2021 and it will take 36 months to complete. (The Star)

Sedania Innovator Bhd unit Sedania As Salam Capital Sdn Bhd has inked a Memorandum of Understanding with FCA Capital Sdn Bhd in its bid for a digital Islamic bank licence from Bank Negara Malaysia. The decision for the digital Islamic bank licence is expected to be announced by 1Q22. (The Edge)

Tan & Tan Developments Bhd, a wholly-owned subsidiary of IGB Bhd, has signed an agreement with Meaningfull Life Sdn Bhd to set up a joint venture company called ReU Living Sdn Bhd, which will focus on operating convalescent/post hospitalisation facilities and senior living facilities. (The Edge)

AirAsia Group Bhd has renamed its 100.0%-owned subsidiary AirAsia Investment Ltd to AirAsia Aviation Ltd in a corporate reorganisation to create a clear distinction between AirAsia Group’s airline and digital businesses. Bo Lingam, formerly president (airlines) for AirAsia Group, takes over as group CEO of AirAsia Aviation to oversee the group's four airlines, namely AirAsia Malaysia, AirAsia Philippines, AirAsia Thailand and AirAsia Indonesia. (The Edge)

The Malaysian Maritime Enforcement Agency (MMEA) has signed the Aeronautical Message Handling Services (AMHS) communication line lease agreement with Telekom Malaysia Bhd for Cospas-Sarsat, a satellite-aided search and rescue initiative. The Cospas-Sarsat system AMHS communication line rental contract worth RM0.5m for a period of 3 years from 1st August 2021 to 31st July 2024. (The Edge)

Fitch Ratings has upgraded the Issuer Default Rating (IDR) of Genting Malaysia Bhd's unit Empire Resorts, Inc to "B+(EXP)" from "B(EXP)". It has also assigned a "BB+(EXP)"/"RR1" rating to Empire's announced senior secured notes. The rating outlook is revised to Stable from Negative. Meanwhile, Genting group-backed Sightline Payments, a digital payment solution provider for the sports betting and casino markets, is eyeing global expansion after achieving unicorn status just two months ago. (The Edge)

Advancecon Holdings Bhd has been appointed a subcontractor for the proposed construction and completion of ground treatment work of Section 4 of the East Coast Rail Link (ECRL) project for RM17.0m. Advancecon’s wholly-owned Advancecon Infra Sdn Bhd has accepted the letter of acceptance from China Communications Construction (ECRL) Sdn Bhd for the appointment. The contract period will be from 15th October 2021 until 25th March 2022. (The Edge)

Binasat Communications Bhd has proposed a private placement to raise as much as RM23.3m to fund its working capital, mainly for the group's fibre optic telecommunications network supporting services. (The Edge)

Malaysia Airports Holdings Bhd (MAHB) will heighten all standard operating procedures (SOPs) for a continuous and sustainable recovery in the aviation industry, in anticipation of a surge in passenger movements in the coming months. All 39 airports under MAHB’s network across the country continued to practise Covid-19 safety measures and remain guided by the government and relevant authorities on the latest SOPs to protect both passengers and the airport community while curbing the pandemic. (The Edge)

AET, the petroleum arm of MISC Bhd, has completed its first-ever liquefied natural gas (LNG) bunkering in the US, working in coordination with Shell to refuel the LNG dual-fuel Aframax tanker Pacific Ruby outside Port Canaveral in Florida. Te transfer of 600 tonnes of marine LNG onto the 113,305 DWT petroleum tanker from the Q LNG 4,000 bunker barge was safely completed within three hours, while the entire bunkering operations took nine hours. (The Edge)

Source: Mplus Research - 15 Oct 2021