Recovery still premature

Market Review

Malaysia:. The FBM KLCI (+1.1%) snapped an 8-day losing streak on the back of bargain hunting activities after more than two-thirds of the key index components performed the relief rally. The lower liners rebounded, while the broader market closed mostly higher with the plantation sector (+2.3%) leading the pack.

Global markets:. Wall Street remained downbeat as the Dow (-0.5%) fell ahead of the US Federal Reserve monetary policy decision with investors pricing in the potential of 75 basis points interest rate hike. The European stock markets also edged lower, while Asia stock markets ended mixed.

The Day Ahead

The FBM KLCI snapped its 8-day losing streak and bounced higher, outperforming the mixed broader market. Given the mixed trading activities on Wall Street, we believe sentiment on the local front may remain tepid ahead of the interest rate decision by the US Fed in the upcoming FOMC meeting. On a side note, the recent South Korea strike could further impact the global supply chain of chip productions. Commodity wise, the Brent crude oil is still hovering above USD120, while the CPO price hovered around RM5,800 but may trend lower after Indonesia announced a levy rate cut to accelerate palm oil shipment.

Sector focus:. While market sentiment may remain cautious, investors may look out for bargain hunting opportunities in REITs, consumer, and banking stocks. Meanwhile, traders may lookout for trading opportunities within the O&G sector as the crude oil price remains elevated above USD120 zone.

FBMKLCI Technical Outlook

The FBM KLCI rebounded from the 52-week low and closed above the earlier support at 1,475. Technical indicators remained negative as the MACD Histogram extended a negative bar, while the RSI hovered below 30. Support is pegged along 1,450-1,475, while the resistance is set at 1,500-1,530.

Company Brief

Powerwell Holdings Bhd’s wholly-owned subsidiary, Powerwell International Sdn Bhd has secured a contract worth RM94.0m from Tialoc Malaysia Sdn Bhd. The contract entails supplying, installing, testing and commissioning low voltage (LV) panels for a new building project of a leading multinational corporation in Kulim Hi Tech Park, Kedah. The commencement date of the contract is 10th June 2022 and the delivery of the supply contract is expected to be completed by 15th March 2023. (The Star)

Dynaciate Group Bhd has proposed to acquire a 23,550-sqm freehold industrial land in Bentong, Pahang for RM12.0m cash. The proposed acquisition, which will be financed through borrowings, is expected to be completed by 2Q22. (The Star)

Karex Bhd chairman Tun Arshad Ayub has passed away at the age of 93. Arshad held 15.8m shares directly and 5.2m shares indirectly via Zalaraz Sdn Bhd. (The Edge)

Cahya Mata Sarawak Bhd (CMS) is disposing of its entire 25.0% stakes in OM Material (Sarawak) Sdn Bhd and OM Materials (Samalaju) Sdn Bhd to OM Materials (S) Pte Ltd (OMS) for US$120.0m cash (RM526.6m). (The Edge)

Jentayu Sustainables Bhd has proposed a private placement to raise as much as RM47.1m, mainly to finance the group's pre-development expenditures. The exercise entails the issuance of up to 142.6m new shares, representing not more than 30.0% of the total number of issued shares, and it is intended to be placed to third party investors to be identified at a later date. (The Edge)

Caely Holdings Bhd has appointed fashion designer Datuk Jovian Mandagie as its new executive vice chairman, effective 14th June 2022. Jovian is the son-in-law of Prime Minister Datuk Seri Ismail Sabri Yaakob. Jovian, 36, began his career in the fashion industry in 2006, before expanding into bridal designs and wedding planning. (The Edge)

Source: Mplus Research - 15 Jun 2022