Downward pressure resume

Market Review

Malaysia:. The FBM KLCI (-1.4%) endured a volatile session with more than two thirds of the key index components closed lower. The lower liners also extended their weakness, while all 13 major sectors on the broader market ended in red with the plantation sector (-5.1%) taking the worst beating after CPO prices slumped.

Global markets:. US stockmarkets recovered from their intraday low as the Dow (+0.2%) rose after ISM Non-Manufacturing data in June 2022 eased to 55.3; which may prompt less hawkish stance from the US Federal Reserve. The European stock markets rebounded, but Asia stock markets finished mostly negative.

The Day Ahead

The FBM KLCI plummeted as selling pressure in consumer and plantation heavyweights weighed on the key index. Traders should watch closely on the Brent crude oil amid sliding commodity markets as market could be pricing in recession worries and the Brent oil is trading around the USD100 psychological level. Meanwhile, the CPO price violated below the key RM4,000 level, closing just below RM3,900 in anticipation of higher stockpiles in Malaysia, while the gold price extended its decline below USD1,750. While we think the local bourse is set for bargain hunting activities following mildly higher movement from Wall Street, we opine that the upside could be capped amid the falling commodities environment.

Sector focus:. Given the setup above, investors may want to avoid the commodities related sectors especially industrial products, energy, and plantation. Investors are likely to turn their head to banking, consumer, and food related counters. The technology sector may see buying interest after Nasdaq flashing sign of rebound.

FBMKLCI Technical Outlook

The FBM KLCI fell further from its daily EMA9 and closed just above the immediate support at 1,420. Technical indicators remained mixed as the MACD Histogram extended a positive bar, while the RSI remained below 50. Next support is located along 1,400-1,420, while resistance is pegged along 1,460-1,480.

Company Brief

V.S. Industry Bhd has announced that PwC Consulting Associates (M) Sdn Bhd has completed its independent third-party review of the company’s labour practices and has not identified evidence of systemic forced labour practices identified within the group. The independent Review was based on the 11 International Labour Organization (ILO) indicators of forced labour and the scope extended to entire workforce of its Malaysia operations comprising both local and migrant workers, as well as workers hired through the Recalibration Programme. (The Star)

HSS Engineers Bhd's unit HSS Integrated Sdn Bhd has been awarded a RM16.6m variation order (VO) to provide supervising works for Section 9 of the East Coast Rail Link (ECRL) from Serendah to Port Klang. The 53.5km section consists of tunnels, viaducts, at-grade sections and stations. (The Star)

Malaysian Genomics Resource Centre Bhd's subsidiary MGRC Therapeutics Sdn Bhd has entered into a partnership with Rinani Genotec Sdn Bhd to offer sport based genetic tests. The collaboration will see both parties consult and collaborate on sports-based genetic profile testing and the marketing of these services. Genotec, a biomedical technology firm focusing on stem cell treatment and genetic testing, offers a direct-to-consumer sports and fitness DNA test that enables individuals to better understand their genetic profile in sports and fitness-related areas. (The Star)

Heitech Padu Bhd has secured a contract worth RM43.8m for networks infrastructure services for Permodalan Nasional Bhd and Amanah Saham Nasional Bhd. Heitech Padu has signed the letter of award to supply, delivery, installation, testing, commissioning, operations and maintenance of managed wide area networks infrastructure services for 5 years from 1st July 2022. (The Star)

Hengyuan Refining Company Bhd is planning to establish an RM5.00bn unrated medium-term notes programme, according to the Securities Commission Malaysia’s list of corporate bonds and sukuk under the lodge and launch framework. Notably, Aminvestment Bank Bhd and Maybank Investment Bank Bhd have been appointed as the principal advisers for the proposed corporate exercise. (The Edge)

Ideal United Bintang International Bhd (Ideal) is proposing to acquire 17 parcels of freehold land in Penang for a total of RM475.4m cash to expand its land banks. The group 70.0%-owned subsidiary Lestari Duta Sdn Bhd and Mujur Sinarjaya Sdn Bhd had entered into a sales and purchase agreement with Aspen Bell Avenue Sdn Bhd on 27th January 2022. The proposed acquisition is slated to be completed by 30th March 2023. (The Edge)

Sime Darby Property Bhd has reported that the Battersea Power Station has reached practical completion of the Grade II listed Power Station after 8 years of transformational restoration. Battersea Power Station is owned by a Malaysian consortium consisting of Sime Darby Property, S P Setia Bhd and the Employees Provident Fund. (The Edge)

Affin Bank Bhd has appointed Musa Abdul Malek as the new chairman of Affin Islamic Bank Bhd (AiBB), effective 22nd June 2022. Musa had been serving as an independent non-executive director of AiBB since 1st August 2019. (The Edge)

Boustead Holdings Bhd and Turkey's Great East Capital (GEC) have teamed up to establish the republic's first Islamic digital banking to tap the huge potential of 85.0m population. Boustead is planning to take up strategic investment in the venture and GEC is currently in the process of applying for the digital bank's licence from the relevant Turkish authorities. (The Edge)

Source: Mplus Research - 7 Jul 2022