Downward pressure uneased

Market Review

Malaysia:. The FBM KLCI (-0.9%) sank deeper into the red amid selling pressure in gloves heavyweights, following the release of Top Glove’s 1QFY22 result that was below-expectations. The lower liners trended lower, while the REIT sector (+0.02%) was the sole outperformer on the negative broader market.

Global markets:. US stockmarkets advanced as the Dow (+0.6%), on expectations that that US Federal Reserve may not hike interest rate sooner-than-expected after the inflation data in November 2021 rose 6.8% YoY; which is within consensus expectations. European stockmarkets trended lower for the third straight session, while Asia stockmarkets finished mostly lower.

The Day Ahead

In line with regional weaknesses, the FBM KLCI ended the week lower due to heavy selldown in glove heavyweights. Meanwhile, foreign investors have sold local equities for the past 8 trading days, valued at RM981m. On the global front, the concerns over the Covid-19 Omicron variant dampening the economic recovery has subsided, which lend a support to both the stocks and commodity markets. This week, investors will be waiting for the conclusion of the FOMC meeting to look out for clues on the monetary policies going forward. On the commodities segment, the CPO price stood above RM4,800, while the crude oil price hovered above the USD75 per barrel mark.

Sector focus:. As both the CPO and crude oil stabilised over the past week, we expect traders to focus on O&G and plantation sectors in the near term. Meanwhile, technology sector may be lifted by the positive performance from Wall Street.

FBMKLCI Technical Outlook

The FBM KLCI retreated to close below the key 1,500 support level. Technical indicators remained mixed as the MACD Histogram has extended turned positive, while the RSI is hovering below the 50 level. The key index may find its next support level at 1,485, while the resistance is pegged along 1,520-1,535.

Company Brief

Top Glove Corp Bhd’s 1QFY22 net profit shrank 69.5% YoY to RM185.7m, dragged down by declining glove average selling prices (ASPs) and lower utilisation rates. A dividend payment of 1.2 sen per share, payable on 10th January 2022 was declared. Revenue in the first quarter fell 25.2% YoY to RM1.58bn. (The Star)

My E.G. Services Bhd (MYEG) has received the Excellent Award from China’s Ministry of Industry and Information Technology following its case presentation on its Zetrix blockchain project at a key industry event in China. MYEG is committed towards developing and building the Zetrix blockchain so that countries and corporations, especially those in the RCEP regions can connect with China’s new digitalised economy. (The Star)

Serba Dinamik Holdings Bhd's indirect wholly-owned subsidiary SD International Sukuk Ltd is reported to have defaulted on its US$7.0m (RM29.5m) semi-annual coupon payment on the outstanding US$222.0m senior Islamic bond or sukuk issued by SD International. (The Edge)

TSH Resources Bhd's 90.0%-owned subsidiary PT Bulungan Citra Persada (BCAP) has proposed to dispose of seven pieces of agricultural land in Kalimantan, Indonesia for RM679.0m cash. BCAP have signed a heads of agreement with PT Kawasan Industri Kalimantan Indonesia and PT Kalimantan Industrial Park Indonesia for the proposed disposal. (The Edge)

Velesto Energy Bhd has announced that Rohaizad Darus will be retiring as its president and executive director on 25th February 2022, after helming the offshore oil and gas rig operator for 10 years. He will be succeeded by Megat Zariman Abdul Rahim, who was Bumi Armada Bhd’s offshore marine services chief and currently heads the vessel operator’s external relations and sustainability. (The Edge)

Chin Hin Group Property Bhd (CHGP) has reported that its 65.0%-owned subsidiary Kayangan Kemas Sdn Bhd is buying a 60.0% stake in Makna Setia Sdn Bhd for RM9.0m to diversify into the infrastructure construction industry. (The Edge)

Source: Mplus Research - 13 Dec 2021