Volatility keeping gains in check

Market Review

Malaysia:. The FBM KLCI (+0.5%) started off the week on a buoyant note, lifted by gains in gloves and selected banking heavyweights yesterday. The lower liners also trended higher, while the broader market closed mostly positive, led by the healthcare sector (+3.3%).

Global markets:. Wall Street ended mixed as the Dow ended flat, but the S&P 500 and Nasdaq shed 0.3% and 0.6% respectively, dragged down by the selloff in technology shares. The European stockmarkets ended mostly higher, while Asia stockmarkets closed mixed.

The Day Ahead

The FBM KLCI bounced back from Monday’s decline as buying interest was noticed in the glove and banking heavyweights. However, we believe the rebound in the healthcare sector might be short-lived as Omicron fears should subside given the hospitalisation rate is still under control. Meanwhile, overall market sentiment should remain positive as FBM Small Cap is on the rise. Commodities wise, the CPO price remained firm above RM5,500, while the crude oil price hovered above USD90 per barrel mark, suggesting uptrend cycle is still intact. Also, metal related commodities such as aluminium is trading at 13Y high, while steel rebar has been rebounding.

Sector focus:. We believe traders may focus on commodity related sectors such as the O&G and plantation sectors as CPO price and Brent oil are rallying strongly in their uptrend cycle. Meanwhile, the building material segment may start to see trading activities amid the rebound in respective commodities.

FBMKLCI Technical Outlook

The FBM KLCI rebounded and closed above the immediate resistance at 1,530 and the daily EMA 60 level. Technical indicators turned positive as the MACD crossed above the zero level, while the RSI hovered above 50. The previous resistance level at 1,530 has turned support, while the next support is set around 1,520. The resistance is pegged around 1,545-1,570.

Company Brief

The High Court has yesterday ordered Serba Dinamik Holdings Bhd to make a public announcement on the Factual Findings Update (FFU) by Ernst & Young Consulting Sdn Bhd (E&Y Consulting), appointed to conduct a special independent review (SIR) on the company within two market days from the date of this order. The court also dismissed Serba Dinamik's application to expunge parts of Bursa Malaysia's affidavit relating to the FFU. (The Star)

Censof Holdings Bhd’s 3QFY22 net profit jumped 31.0% YoY to RM2.6m, capitalising on the industry’s appetite in the adoption of digitalisation by the government and commercial sectors. Revenue for the quarter, however, fell 10.1% YoY to RM21.3m. (The Star)

LPI Capital Bhd’s 4QFY21 net profit declined 23.3% YoY to RM73.1m, amid lower underwriting profit caused by higher net claims incurred. Revenue for the quarter, however, improved marginally by 1.5% YoY to RM429.0m. A second interim dividend of 45 sen per share, payable on 2nd March 2022 was declared. (The Edge)

Hong Seng Consolidated Bhd is in talks with Japanese global trading and investment firm Mitsui & Co Ltd's subsidiary Mitsui Co (Malaysia) Sdn Bhd to form a strategic partnership for Hong Seng's nitrile butadiene latex business at Kedah Rubber City and integrated logistics services business in Penang. (The Edge)

OpenSys (M) Bhd has received an additional order worth RM10.8m to supply cash recycling machines (CRMs) to Bank Simpanan Nasional (BSN) branches. With this latest order, BSN would commission more than 270 CRMs across branches nationwide by the end of 2022. (The Edge)

KPower Bhd's executive chairman and group managing director Mustakim Mat Nun has bought a 0.8% stake, or 4.3m shares, in the company at 34.5 sen apiece from his own investment vehicle Grand Deal Vision Sdn Bhd via a direct business transaction. The transaction raised Mustakim's direct interest in KPower to 40.7m shares or 7.5%, while he holds an indirect stake of 7.3% via his investment vehicle. (The Edge)

Source: Mplus Research - 8 Feb 2022