Extended pullback

Market Review

Malaysia:. The FBM KLCI (-0.8%) slipped for the third straight session, mirroring the weakness on Wall Street overnight, dragged by weakness in banking heavyweights yesterday. The lower liners remained downbeat, but the energy (+1.1%) and plantation (+0.1%) sectors outperformed the negative broader market.

Global markets:. Wall Street extended their slide as the Dow (-1.0%) fell on concern over the hawkish US Federal Reserve interest rate stance that offset the earnings optimism from Morgan Stanley, Bank of America and Procter & Gamble. The European stockmarkets were mixed, but Asia stockmarkets remained negative.

The Day Ahead

Persistent selling pressure in the banking heavyweights dragged the key index to its third declining session. We expect local sentiment to remain sour over the near term, especially on the technology stocks following the choppy session on Wall Street overnight as investors continued to brace for inflation battles and sentiment may stay volatile ahead of the FOMC meeting next week. On the other hand, the commodity prices remained strong. The crude oil price traded above USD88/bbl mark, while the CPO price was firmer driven by expectation for export growth as Indonesia’s government intends to limit its palm oil exports.

Sector focus:. Following recent selloff, investors may find opportunities in the banking stocks ahead of today’s Monetary Policy meeting. Besides, we expect the energy and plantation counters to trade positively amid higher commodities prices.

FBMKLCI Technical Outlook

The FBM KLCI marked the third consecutive session of losses and the key index fell below the daily EMA 60 and SMA 100 level. Technical indicators turned negative as the MACD Histogram was flat, while the RSI fell below the 50 level. Traders may watch out if the key support at 1,530 holds. Next support is located at 1,505, while the resistance is envisaged at 1,570.

Company Brief

Berjaya Corp Bhd (BCorp) has proposed to dispose of its entire 71.7% stake in Berjaya Higher Education Sdn Bhd which owns Berjaya University College (BUC) to Nanyang International Education Group Sdn Bhd (Nanyang). The BUC transaction is currently pending approval from the Ministry of Higher Education and is expected to be completed by June 2022. The move is part of BCorp strategy that included divestments from areas of business that no longer fell within this classification. (The Star)

Nestcon Bhd has secured a construction contract worth RM188.5m from Konsortium Exsim Development Sdn Bhd (KED). The contract entails the construction of a 39-storey building comprising 608-unit apartment suite and 3-unit retail shop in Jalan Klang Lama, Kuala Lumpur. The overall contract period for the project is within 36 months from the date of commencement and the project is expected to be completed for handover on or before 18th January 2025. (The Star)

KNM Group Bhd's board of directors has approved the proposed listing of its indirect wholly-owned subsidiaries on Catalist in Singapore. FBM Hudson Italiana SpA and FBM-KNM FZCO, collectively known as the FBM group, will be listed on the sponsor-supervised board of the Singapore Stock Exchange via an initial public offering. (The Edge)

Kejuruteraan Asastera Bhd (KAB) is set to acquire a mini-hydropower plant located in North Sumatera, Indonesia. KAB wholly-owned subsidiary KAB Energy Holdings Sdn Bhd had entered into a term sheet agreement with Sarawak Cable Bhd to acquire the entire issued share capital of the latter’s Indonesia-based subsidiary, PT Inpola Mitra Elektrindo (PT IME), for a purchase consideration of RM10,000. (The Edge)

Petronas Chemicals Group Bhd (PetChem) plans to build a 60,000T pa. melamine plant in Gurun, Kedah, which will make it the sole melamine producer in Southeast Asia. The plant is targeted to come onstream in 2024 but did not indicate how much it is investing in the plant. (The Edge)

Texchem Resources Bhd has proposed to raise its stake in Sushi King Sdn Bhd to 98.0% through the acquisition of another 28.0% stake in the restaurant chain operator for RM102.2m. The purchase of the additional stake from Asia Yoshinoya International Sdn Bhd will allow the group to enhance its assets and earnings base through the consolidation of the stake, and to facilitate easier decision-making and control of the restaurants. (The Edge)

Tropicana Corp Bhd has redesignated its independent director and former Inspector-General of Police, Tan Sri Mohamad Fuzi Harun as its chairman effective 19th January 2022. Fuzi, 62, is replacing Top Glove Corp Bhd founder and chairman Tan Sri Dr Lim Wee Chai, who resigned from the Tropicana chairman post on 11th January 2022. (The Edge)

Malaysian Genomics Resources Centre Bhd (MGRC) has redesignated its independent director Tan Sri Ahmad Mohd Don as its new chairman effective 19th January 2022. The former Bank Negara Malaysia governor is replacing Tan Sri Dr Rafiah Salim, who retired in November 2021. (The Edge)

Source: Mplus Research - 20 Jan 2022