Easing anxiety

Market Review

Malaysia:. The FBM KLCI (-0.2%) succumbed to the eleventh-hour selling pressure in selected banking and Petronas-related heavyweights to edge mildly lower yesterday. Both the lower liners and the broader market, however, ended mixed with the plantation sector (+1.8%) leading the pack after CPO price rebounded.

Global markets:. US stockmarkets extended their gains as the Dow (+1.1%) advanced on optimism that the US Federal Reserve will be able to tame inflation without tipping the economy into recession. The European stock markets also marched higher, while Asia stock markets ended mostly positive.

The Day Ahead

The FBM KLCI extended its decline as the key index was dragged by selling pressure in the banking and industrial products heavyweights. Nevertheless, we believe the overnight rallies on Wall Street, coupled with the China’s stimulus plan should entice buyers to scoop up some shares within the beaten-down stocks at this current juncture. Still, long-term sentiment should remain cautious on the back of heightened inflationary pressure. Commodities wise, both the crude oil and CPO rebounded, trading above USD104 and RM4,250 respectively.

Sector focus:. We expect the technology sector may shine along with the sharp gains in tech-led rebound on Wall Street overnight. Besides, the energy and plantation sectors may see bargain hunting activities after a heavy selldown amid recovering underlying commodity prices. Meanwhile, the healthcare sector should gain traction amid rising Covid-19 daily confirmed cases.

FBMKLCI Technical Outlook

The FBM KLCI breached its immediate support at 1,420, closing below the 52-week low. Technical indicators remained mixed as the MACD Histogram extended a positive bar, while the RSI remained below 50. Next support is located at 1,400, while resistance is envisaged around 1,460-1,480.

Company Brief

Siab Holdings Bhd has secured a contract worth RM89.6m from SDM Assets I Sdn Bhd to construct an industrial building located in Klang, Selangor. The contract is to build a 2-storey warehouse with office space on the mezzanine level, an electrical substation, guard house, common facilities (including prayer rooms, dining area and waste chamber), tank house and pump, and M&E area. The project is expected to be completed within 12 months from the commencement date. (The Star)

ECM Libra Group Bhd’s shareholders have been told to reject the takeover bid by the group's non-independent and non-executive director Datuk Lim Kian Onn who has made a conditional mandatory general offer to buy out minority shareholders of the group, according to independent adviser DWA Advisory Sdn Bhd who also deemed the takeover offer as not fair and not reasonable. (The Edge)

Axiata Group Bhd’s 63.0%-owned subsidiary, edotco Group Sdn Bhd, has reported that its Myanmar operations are largely unaffected by the political upheaval there, but the company is not putting more investment into the country until there is clarity on how the situation is moving forward. The repatriation of funds is difficult because getting the US Dollar is quite a challenge in Myanmar. (The Edge)

Telekom Malaysia Bhd (TM) succeeded in dismissing US$34.5m (RM152.9m) claims by Singapore-based IPTV solution provider Vodoke Pte Ltd from the Singapore International Arbitration Centre (SIAC). However, SIAC also dismissed TM’s counterclaims that Vodoke was liable for inducing or procuring a breach of the agreement between Vodoke Nusantara Pte Ltd and TM.

On another note, TM unveiled its new cloud and digital services company Credence, with the aim to accommodate private enterprises and the public sector in their digital transformation journey. (The Edge)

CIMB Group Holdings Bhd is planning to acquire the remaining minority shares it does not own in CIMB Bank Bhd for RM1.4m, in its bid to streamline the shareholding structure. The exercise involves a members’ scheme of arrangement, which is subject to the approval of CIMB Bank shareholders at a court-convened meeting after which must be sanctioned by the High Court. (The Edge)

Boustead Properties Bhd and South Korea-based KMT Group signed a document of understanding to bring in the first K Plus Food Market grocer outlet to The Curve shopping mall in Petaling Jaya, Selangor, in 4Q22. (The Edge)

IOI Corporation Bhd resumed its share buy-back on 6th July 2022 after a six-month hiatus with a purchase of 613,000 shares for RM2.3m, translating into RM3.75 per share. Following the share buy-back, its cumulative number of net outstanding treasury shares stood at 72.9m. (The Edge)

Source: Mplus Research - 8 Jul 2022