Cautiousness ahead of inflation data

Market Review

Malaysia:. The FBM KLCI (+0.02%) ended on a flattish note after recovering all its intraday losses, lifted by the eleventh-hour gains in selected plantation heavyweights yesterday. The lower liners, however, retreated, while the broader market ended mostly negative, with the technology sector (-3.2%) underperformed.

Global markets:. US stockmarkets erased all their intraday gains as the Dow (-0.6%) extended its decline ahead of the inflation data release today on mounting concern that inflationary pressure may remain in place. The European stock market, however, turned slightly upbeat, while Asia stock markets ended mostly lower.

The Day Ahead

The FBM KLCI closed marginally higher as final-hour buying interest lifted the key index. Nevertheless, we believe sentiment could remain tepid amid downtrend move on Wall Street and regional markets. Meanwhile, concerns over recession persisted against the backdrop of rising global interest rate setting. Commodities wise, crude oil price sank below USD100 per barrel amid concern over weaker demand following China’s stringent move to curb the Covid-19 spread. The CPO was traded towards RM4,000 amid declined palm oil export and rising CPO inventories in June 2022.

Sector focus:. We believe the technology sector may continue to underperform, mirroring the weakness on Nasdaq overnight, while the energy sector may also take cue from the sharp decline on crude oil prices. On a brighter note, the banking sector may benefit from expected interest rate hikes in near future.

FBMKLCI Technical Outlook

The FBM KLCI eked out marginal gains after hovering in the negative territory throughout the trading session. Technical indicators remained negative as the MACD Histogram extended a negative bar, while the RSI hovered below 50. Resistance is envisaged along 1,460-1,480, while the support is pegged around 1,400-1,420.

Company Brief

Gamuda Bhd has reported that Amanat Lebuhraya Rakyat Bhd (ALR) and the 4 expressway concession companies have agreed to extend the Definitive Agreement Execution Date from 31st July 2022 to 30th August 2022. Each concession holding companies -- Kesas Holdings Bhd, Sistem Penyuraian Trafik KL Barat Holdings Sdn Bhd (SPRINT Holdings), Lingkaran Trans Kota Holdings Bhd (LITRAK Holdings) and Projek Smart Holdings Sdn Bhd (SMART Holdings), have each separately accepted their conditional letter of offer for the proposed disposal of all the securities to ALR that amounts to a total of RM2.33bn. (The Star)

Chin Hin Group Property Bhd has secured a RM330.0m contract to undertake substructure and superstructure works for the Intel Pelican project in Penang. The group 65.0%-owned subsidiary, Kayangan Kemas Sdn Bhd was awarded the contract by Exyte Malaysia Sdn Bhd. The 15-month contract is expected to be completed by 3Q23. (The Edge)

Hextar Global Bhd's major shareholder Datuk Eddie Ong Choo Meng is injecting three industrial properties located at Pulau Indah Industrial Park into KIP Real Estate Investment Trust (REIT) via transactions worth RM78.9m. KIP REIT (in which Ong owns a 20.0% stake) is buying the properties, collectively measuring for 658,361-sqf. (The Edge)

Muar Ban Lee Group Bhd (MBL) is exiting its investment in property firm Symphony Life Bhd, whose share price has fallen 46% since MBL bought into it. MBL has announced that it is selling its wholly-owned unit Theron Holdings Sdn Bhd, that owns a 13.7% stake in Symphony Life, to XOX Bhd for RM19.3m cash. (The Edge)

Omesti Bhd has teamed up with privately-held healthcare firm 360 Medic Holdings Sdn Bhd (360MH) to set up and operate diagnostic and screening centres in Malaysia. The joint venture (JV) is consistent with its objective of seeking various strategic alliances and JVs for synergistic benefits, and the deal will further strengthen its presence in the healthcare industry. (The Edge)

AME Elite Consortium Bhd is expediting the continued expansion of its repeat customer HQPack Sdn Bhd by constructing its 6th facility in i-Park@Indahpura. The contract comes on the heels of HQ Pack taking delivery of its recently-completed 60,000-sqf manufacturing facility in i-Park@Indahpura in November 2021. The new facility is slated for completion in 2H23. (The Edge)

Tower Real Estate Investment Trust (Tower REIT) has introduced a customisable office layout service in Menara HLX, located in Jalan Kia Peng, Kuala Lumpur. The REIT is also considering expanding the service to other buildings under its portfolio in the near future. (The Edge)

Allianz Malaysia Bhd has appointed economist Dr Muhammed Abdul Khalid as its independent and non-executive director, which takes effect from 15th July 2022. He is currently a research fellow at the Institute of Malaysian and International Studies of Universiti Kebangsaan Malaysia. He is also a member of the board of trustees of the Malaysian Institute of Economic Research, adjunct professor at the Centre for Policy Research and International Studies of Universiti Sains Malaysia, a member of the honorary council of advisors at the European-Malaysian Chamber of Commerce and a member of the economic committee of Malaysia Competition Commission. (The Edge)

Microlink Solutions Bhd is seeking to transfer its listing status to the Main Market of Bursa Malaysia. The group plans to amend its constitution to ensure compliance with the listing requirements, pursuant to the proposed transfer. The details of the proposed amendments will be set out in the circular to the shareholders of the company, which will be circulated in due course. (The Edge)

Source: Mplus Research - 13 Jul 2022