Still wobbly, but downside risk limited

Market Review

Malaysia:. The FBM KLCI (-0.2%) staged a pullback to close below the 1,600 level, on quick profit taking in selected banking and gloves heavyweights yesterday. The lower liners, however, extended their lead, while only the financial services (-0.5%) and REIT (-0.3%) sectors underperformed the positive broader market.

Global markets:. Wall Street extended its gains and the Dow (+0.3%) advanced, driven by technology shares after Tesla Inc CEO Elon Musk bought 9.2% stake in Twitter Inc (+27.1%). The European stock markets also remained upbeat, while Asia stock markets ended mostly positive.

The Day Ahead

The FBM KLCI underperformed the regional peers as the key index traded below 1,600 amid profit taking activities within selected heavyweights. We expect the market to remain volatile over the near term, while investors continue to monitor the potential move of Western countries imposing more sanctions against Russia. Nevertheless, downside risk should be cushioned by continuous foreign inflows. Meanwhile, EU’s acceptance of Malaysia’s Covid-19 vaccination may bode well for the aviation sector moving forward. Commodities wise, both crude oil and CPO prices trended higher as global demand remained strong.

Sector focus:. Given the rebound in FCPO price, the plantation stocks could be traded actively today. Meanwhile, we investors and traders to focus on the construction, building material and property sectors following the highway deals. Besides, selected technology stock may trade positively in tandem with the Nasdaq movements overnight.

FBMKLCI Technical Outlook

The FBM KLCI slipped below the 1,600 level but managed to hold above the daily EMA9. Technical indicators turned positive as the Histogram is gradually recovering, while the RSI is hovering above 50. Resistance is pegged around 1,600- 1,620, while the support is set at 1,580.

Company Brief

Pintaras Jaya Bhd has secured three new piling contracts worth a total of RM90.0m in Singapore. The projects have commencement dates in May 2022 with contract periods varying from 3-4 months. (The Star)

The government has agreed to restructure four Klang Valley highway concessionaires, namely Kesas Sdn Bhd (Kesas Expressway), Syarikat Mengurus Air Banjir dan Terowong Sdn Bhd (SMART Tunnel), Sistem Penyuraian Trafik KL Barat Sdn Bhd (SPRINT Expressway), and Lingkaran Trans Kota Sdn Bhd (Damansara-Puchong Expressway or LDP). This came after trading of shares in Lingkaran Trans Kota Holdings Bhd (Litrak), Gamuda Bhd and Kumpulan Perangsang Selangor Bhd (KPS) was suspended yesterday, as the companies announced that they had received offers from Amanat Lebuhraya Rakyat Bhd (ALR) for their stakes in the concessionaires involved. The restructuring will ensure toll rates will not be increased until the concession periods end, and will save on compensation costs from 1st January 2022 until the end of the concessions. (The Edge)

Separately, Kumpulan Perangsang Selangor Bhd (KPS) has secured a RM18.1m contract for the supply and delivery of water meters. KPS’ 51.0%-owned subsidiary Aqua-Flo Sdn Bhd (AFSB) entered into a framework agreement (FA) with Pengurusan Air Selangor Sdn Bhd (Air Selangor) for the supply and delivery of water meters for new development, meter migration and replacement programme of 15mm plastic, 15mm brass, 25mm brass and 40mm brass water meter. (The Edge)

Tenaga Nasional Bhd (TNB) wholly-owned unit, Vantage RE Ltd has completed its acquisition of a 100.0% stake in a 97.3M onshore wind portfolio in the UK from a number of funds advised by independent global private asset management firm Capital Dynamics for £145.9m (RM807.7m). This acquisition follows TNB’s maiden venture into the UK offshore wind market in October 2021. (The Edge)

TSH Resources Bhd plans to dispose of land in Indonesia's North Kalimantan province for a total of RM711.7m. The disposal includes 2 plots of land in Tanah Kuning Village covering a total area of 3,829.3-ha, and 5 plots of land in Mangkupadi Village covering a total area of 9,385.6-ha. The disposal also includes plots of land in Tanah Kuning Village and Mangkupadi Village that have been previously acquired by TSH Resources from individual landowners but have not yet been certified and registered in Indonesia's National Land Agency. (The Edge)

Malaysian Genomics Resource Centre Bhd (MGRC) has secured a Covid-19 surveillance contract from the Institute for Medical Research (IMR), the biomedical research arm of the Ministry of Health. MGRC is one of the private laboratories that IMR has engaged to outsource genome surveillance of SARS-CoV-2. (The Edge)

Source: Mplus Research - 5 Apr 2022