Back above 1,500

Market Review

Malaysia:. The FBM KLCI (+0.3%) staged a mild rebound after recovering from the intraday low level, driven by selected gloves and plantation heavyweights. The lower liners, however, remained downbeat, while the broader market ended mostly lower with the technology sector (-2.4%) enduring the toughest ride.

Global markets:. US stockmarkets retreated as the Dow (-0.2%) fell, dragged down by the weakness in technology shares, coupled with the concern over the inflationary pressure. European stockmarkets ended lower after erasing all their intraday gains, while Asia stockmarkets closed mixed.

The Day Ahead

The FBM KLCI ended marginally higher prior to the public holiday on Friday with investors bargain hunt on heavyweights. We believe investors will be focusing on blue chips this month on the local front on the back of window dressing activities. However, the negative sentiment from Wall Street may keep the upside limited given the ongoing worries over the Covid-19 Omicron variant as well as the inflationary pressure, where market participants might be anticipating a shift in Fed’s tone towards more hawkish stance in monetary policies going forward. On the commodity markets, the CPO price hovered around RM4,650, while the crude oil price is currently below the SMA200 of USD73 per barrel mark.

Sector focus:. Given the view that the Fed might be more dovish in their stance going forward, investors might avoid technology stocks and shift towards value play for the near term, focusing on heavyweights. Meanwhile, the Baltic Exchange Dry Index has been climbing in the past week, it might support the transportation sector for now.

FBMKLCI Technical Outlook

The FBM KLCI rebounded to close slightly above the critical 1,500 level. Technical indicators remained negative as the MACD Histogram has extended a negative bar, while the RSI hovered below the 50 level. The support level is located at 1,480- 1,500, while the next resistance is pegged along 1,520-1,530.

Company Brief

Alliance Bank Malaysia Bhd has proposed to dispose of its stockbroking business, held by wholly-owned unit Alliance Investment Bank Bhd (AIBB), to Phillip Futures Sdn Bhd. AIBB has inked a conditional agreement to sell the business for a cash amount equal to the business’ net asset value of RM205.2m as at 30th September 2021 plus 60.0% of the aggregate brokerage fee for brokerage transactions concluded by Phillip Futures in the 12-month period from the specified transfer point, less any brokerage transaction costs and any receivable shortfall. Separately, Alliance Bank would also enter into a strategic stockbroking partnership arrangement with Phillip Futures’ parent PhillipCapital Group, enabling the bank’s customers to gain access to regional trading platforms and a broad range of global investment products. The bank expects to conclude the corporate exercise in 1H22. (The Star)

Taliworks Corp Bhd has secured a RM293.9m contract from Pengurusan Air Selangor Sdn Bhd (Air Selangor). The contract was for the development of Sg. Rasau water treatment plant and water supply scheme (Phase 1) Package 3 in Selangor. The completion date for the works shall be on 31st December 2024, 36.5 months from the date of possession of the site on 15th December 2021. (The Star)

AirAsia Group Bhd has revised several important dates for its rights issue of RM978.5m redeemable convertible unsecured Islamic debt securities (RCUIDS) with free warrants following the declaration of a public holiday for all Federal Territories on 3rd December 2021. Trading for the rights will start from 6th December 2021, instead of 3rd December 2021 as scheduled earlier. (The Edge)

Supermax Corp Bhd announced that the entitlement date for a single-tier interim dividend of 5.0 sen per share to be paid on 3rd January 2022 had been changed to 7th December 2021 (from 6th December 2021) as last Friday has been declared as a public holiday. As such, Supermax’s dividend ex-date has also been moved to 6th December 2021, from 3rd December 2021. (The Edge)

UWC Bhd’s 1QFY22 net profit improved 6.2% YoY to RM23.0m, thanks to increased contribution from the semiconductor business segment, as well as the resumption of its operations at full capacity from 20th August 2021. Revenue for the quarter increased 5.3% YoY to RM75.3m. (The Edge)

Southern Steel Bhd is disposing of two parcels of land in Sungai Tiram, Johor for RM65.0m cash, to repay the group’s borrowings. The steel company has inked a conditional sale and purchase agreement with aluminium manufacturer Sinppa Industrial Sdn Bhd for the land disposal measuring approximately 31.1-ac. (The Edge)

Koperasi Permodalan Felda Malaysia 2 Bhd (KPF2) has become a major shareholder of TAFI Industries Bhd after acquiring a 10.2% stake in the latter. KPF2 acquired 12.7m shares in TAFI in a direct transaction from TAFI's major shareholder Armani Synergy Sdn Bhd. (The Edge)

Techna-X Bhd has earmarked US$50.0m in capital expenditure for the expansion of its acquisition Techna Energy Storage Systems (TESS) to expand the capacity of its Wuzhou factory and automate specialised equipment, build a new factory in Qinzhou (excluding land and building costs) and expand its research and development capabilities. (The Edge)

Jaycorp Bhd is implementing a seven-day closure of operation at its Air Tawar factory in Merlimau, Melaka, which is under its unit Yeo Aik Wood Sdn Bhd after 47 employees were tested positive for Covid-19. (The Edge)

The High Court here has approved the schemes of arrangement of Top Builders Capital Bhd and its subsidiaries with its creditors. The order granted by the High Court was obtained as part of the group’s overall restructuring and rehabilitation plan by way of a scheme arrangement with its creditors. (The Edge)

Source: Mplus Research - 6 Dec 2021