Volatility returns

Market Review

Malaysia:. The FBM KLCI (-0.9%) endured another volatile spell alongside with the weakness across regional markets as the key index trimmed its weekly gains (+0.8% WoW). The lower liners extended their slide. The REIT sector (+0.04%) outperformed, while the technology sector (-6.6%) was hammered down.

Global markets:. Wall Street closed mixed as the Dow (-0.6%) extended its losses on disappointing quarterly results from financial stocks such as JP Morgan, Citigroup and BlackRock, but the S&P 500 (+0.1%) and Nasdaq (+0.6%) were driven by bargain hunting activities in beaten down technology shares. Meanwhile, both the European and Asia stockmarkets ended lower.

The Day Ahead

Sentiment was broadly negative on the local bourse last Friday, taking cues from both the global and regional stock markets. Selloff deepened in the technology stocks as concerns over interest rate hikes in the US and overstretched valuations continued to put pressure on the sector. However, given the mild rebound in Nasdaq, we believe technology stocks may perform a technical rebound move at least in the near term. Investors may also focus on China’s economic data such as 4Q21 GDP and unemployment rate to be released today and the Bank Negara’s interest rate decision this week. Commodities wise, the CPO price fell below RM5,000, while the crude oil price extended its uptrend move.

Sector focus:. Given the Brent oil price has surpassed the USD86 level, we expect O&G stocks to trade actively higher in the near term. Investors may focus on banking counters ahead of the interest rate decision release by Bank Negara Malaysia this week.

FBMKLCI Technical Outlook

The FBM KLCI traded in the negative territory for the entire session, but managed to hold above the SMA200 and daily EMA9 level. Technical indicators, however, still positive with MACD Histogram extending another positive bar, while the RSI is above 50. Key support is located at 1,530, while the resistance is pegged at 1,580.

Company Brief

Ageson Bhd has decided not to continue with the supplies of sand to several parties due to the high shipping costs. The sand offer letters did not constitute any legally-binding commitment and there were no definitive agreements entered between the parties in Hong Kong and China. (The Star)

Lion Industries Corp Bhd (LICB) has proposed to dispose of its entire 100.0% equity stake in Eden Flame Sdn Bhd for RM135.9m. Eden Flame owns the long steel plant located in Pasir Gudang, Johor that produces billets that are rolled into steel bars and light sections such as angle bars, flat bars and U-channels. The plant is not in operation as at to-date. Upon completion of the proposed disposal, the LICB group is expected to realise a gain of approximately RM56.5m. (The Star)

AirAsia Group Bhd is now in the midst of formulating a plan to regularise its financial condition to address its PN17 status, which its balance sheet has been negatively impacted by the Covid-19 crisis. There may be some delays for international flights to return to pre-Covid levels due to Omicron variant, but recovery will be supported by the accelerated booster shots and the world learning to live with the coronavirus. (The Edge)

KESM Industries Bhd plant in China under KESM Industries (Tianjin) Co Ltd has stopped production to observe lockdown regulations imposed by the local government following the discovery of Covid-19 cases. (The Edge)

CIMB Group Holdings Bhd’s unit CIMB Bank Bhd has priced its US$500.0m RegS/144A Sustainable Development Goals Bond (SDG bond) on 13th January 2022; the first-ever RegS/144A SDG Bond to be issued by a Malaysian bank in the international capital markets. (The Edge)

Ahmad Zaki Resources Bhd (AZRB) has proposed to acquire a parcel of freehold industrial land and a factory in Ulu Selangor from MTD Group's units for RM41.0m cash. The proposed acquisition will provide AZRB with the opportunity to utilise the industrial land to further expand its in-house production of precast concrete components as well as to serve as a store or depot for the group. (The Edge)

Source: Mplus Research - 17 Jan 2022