Volatility taking shape

Market Review

Malaysia:. The FBM KLCI (-0.9%) endured another volatile session alongside with weakness across regional peers that was marred by the selloff on Wall Street overnight. The lower liners declined, while all 13 major sectors on the broader market ended in the red with the technology sector (-1.4%) taking the heaviest hit.

Global markets:. The US stockmarkets extended their decline as the Dow (-0.5%) slipped on the on-going concern over the hawkish stance from the US Federal Reserve in regards to the pace of interest rate hike and tapering of bond purchases. Both the European and Asia stockmarkets were downbeat.

The Day Ahead

The FBM KLCI tumbled in tandem with the weak sentiment across the regional bourses as investors took cue from the US stock markets’ slump after the US Fed meeting minutes signalled a faster timetable on interest rate hikes. We expect stock market to stay volatile and downward bias at least for the near term given the Wall Street is still on the pullback phase. However, investors may look for laggard counters with high earning visibility ahead of the February reporting season. Commodities wise, both the crude oil and CPO prices continued to trend higher.

Sector focus:. Whilst the local bourse may take cue from the overnight losses from the Wall Street, investors may look out for bargain hunting activities especially in the consumer related sector amid economic recovery, as well as the technology sector given its positive prospects over the longer run. Meanwhile, the plantation sector may gain traction ahead of the earning season.

FBMKLCI Technical Outlook

The FBM KLCI (-0.9%) drifted lower and broke the previous support at 1,530, dipping below the daily EMA9 and EMA120 level. Technical indicators, however were positive as the MACD Histogram has extended a positive bar, while the RSI hovered above the 50 level. The next support level is located at 1,505, while the resistance is pegged along 1,560.

Company Brief

Lion Industries Corp Bhd (LICB) has proposed to acquire 80.0-ac of leasehold agriculture land in Sepang, Selangor, for RM23.0m cash. The sub-divided land is located about 10 km away from KL International Airport. LICB plans to convert the usage of the land from the existing agricultural land to "mixed development/industrial development. (The Star)

Samaiden Group Bhd’s wholly-owned subsidiary, Samaiden Sdn Bhd (Samaiden) has entered into a strategic partnership agreement with SWG Technologies (M) Sdn Bhd, a wholly-owned subsidiary of Sinowaja (M) Sdn Bhd to collaborate in providing solutions for the renewable energy (RE) market in Sabah and Sarawak. Samaiden’s scope of work shall include supplying the necessary products and technical support to Sinowaja, while Sinowaja will support in design, research and development, and related works particularly in solar PV projects. (The Star)

Serba Dinamik Holdings Bhd has slipped into Practice Note 17 (PN17) status after its external auditor Nexia SSY PLT expressed a disclaimer of opinion on its audited financial statements for the 18-month period ended 30th June 2021. The company has 12 months to regularise its financial condition, failing which it will be delisted. (The Edge)

Sam Engineering & Equipment (M) Bhd has proposed a bonus issue of 406.1m shares on the basis of three new shares for every share held. (The Edge)

Reach Energy Bhd has reported that its unit Emir-Oil LLP which is located in Republic of Kazakhstan might be affected by the country’s recent state of emergency declaration. The cumulative effects might contribute to a shortfall and impact the company financially and operationally. However, it is unable to ascertain the full financial and operational impact at this juncture due to the uncertain situation in Kazakhstan. (The Edge)

Source: Mplus Research - 7 Jan 2022