Resumption of recovery trend

Market Review

Malaysia:. The FBM KLCI (+0.5%) shrugged off previous session weakness as the buying interest returned and saw gains in selected banking, telco and Petronas heavyweights. The lower liners also advanced, while the broader market closed mostly upbeat with the technology sector (+2.5%) taking lead.

Global markets:. Wall Street cheered as the Dow (+1.4%) climbed after the US Federal Reserve delivered another 75 basis points of rate hike and guided that the pace of future rate hikes may be less aggressive to tame inflation. The European stock markets also advanced, but Asia stock markets closed mostly higher.

The Day Ahead

The FBM KLCI reversed earlier losses to end in the positive territory prior to the US Fed’s interest rate decision as concerns over rate hikes have been priced in. We believe the recent rebound should continue as the comments by the US Fed Chairman Jerome Powell have eased investors’ concerns over the interest rate hike outlook going forward. The positive momentum on Wall Street is likely to spill over to the regional and local bourses. Commodities wise, the crude oil rose above USD106 per barrel, while the CPO was traded above RM3,850.

Sector focus:. The local bourse may trade in positive tone following the solid gains on Wall Street. We believe the technology sector should outperform as Nasdaq booked its biggest daily percentage gain since April 2020 overnight. Meanwhile, the energy sector may gain traction as the crude oil price has shown improvement.

FBMKLCI Technical Outlook

The FBM KLCI rebounded as the key index pared mild losses in the morning session and closed as a hammer. Technical indicators remained in a recovery mode as the MACD Histogram has extended a positive bar, while the RSI hovered above 50. Resistance is located along 1,480-1,500, while the support is set at 1,400-1,410.

Company Brief

Gagasan Nadi Cergas Bhd’s wholly-owned subsidiary, Nadi Cergas Sdn Bhd, has secured a RM189.8m contract from Paramount Property Development Sdn Bhd, a unit of Paramount Corporation Bhd, to build affordable high-rise residences in Kemuning Utama, Shah Alam. Under the contract, Nadi Cergas will undertake the turnkey contract of designing and developing 929 residential units in Kemuning Utama township in Shah Alam, Selangor. (The Star)

IGB Real Estate Investment Trust’s (REIT) 2QFY22 net property income (NPI) increased 67.4% YoY to RM105.7m, on lower rental support provided to tenants. Revenue for the quarter gained 57.5% YoY to RM133.8m. (The Star)

Opensys (M) Bhd has obtained approval from the Securities Commission for the transfer of its listing from the ACE Market to the Main Market of Bursa Malaysia. The proposed transfer is subject to further approval from Bursa Securities and the extraordinary general meeting on a date to be determined. (The Star)

Hubline Bhd is exploring a potential collaboration with the Europe-based Port of Antwerp-Bruges International (POABI) in the development and operation of a proposed deep-sea port in Kuching, Sarawak. The company has inked a one-year Memorandum of Understanding (MoU) with POABI on 26th July 2022 for the purpose. POABI is a subsidiary of Europe’s second largest port, Port of Antwerp Bruges. (The Edge)

Tenaga Nasional Bhd (TNB) had at 3.02pm fully restored electricity supply in areas across Peninsular Malaysia affected by a power outage since 12.39pm, due to damaged equipment in the main power intake substation in Yong Peng, Johor. Areas affected by the power outage included Petaling Jaya, Cheras and Bangi in the Klang Valley, Bayan Lepas and Seberang Jaya in Penang, Bandar Indera Mahkota in Pahang, and Panchor in Johor. (The Edge)

AME Elite Consortium Bhd has entered into an underwriting agreement with I REIT Managers Sdn Bhd, RHB Trustees Bhd and Hong Leong Investment Bank Bhd for the initial public offering (IPO) of AME Real Estate Investment Trust (REIT) that is set to be an Islamic industrial REIT that will have an initial portfolio of 31 industrial properties. AME REIT will be the main vehicle representing the property investment activity of AME Elite upon its debut on the Main Market. (The Edge)

Bursa Malaysia Bhd does not foresee any major delays in companies’ listing plans in 2022. Instead, it is expecting 37 IPOs in 2022 compared with 30 in 2021, primarily driven by a higher number of listings on the ACE Market following the reopening of the economy. (The Edge)

Unique Fire Holdings Bhd, which is slated to be listed on Bursa Malaysia’s ACE Market on 5th August 2022, has reported that its initial public offering (IPO)’s public portion has been oversubscribed by 5.1x. It received 2,508 applications seeking 121.5m new shares for the 20.0m new shares made available for the Malaysian public. (The Edge)

SNS Network Technology Bhd, which is tentatively scheduled to debut on the ACE Market on 2nd September 2022, expects to raise up to RM90.7m from its initial public offering (IPO) to support its business expansion. At an issue price of 25 sen apiece and based on its enlarged share capital of 1.61bn shares, SNS Network is expected to have a market capitalisation of RM403.2 m. (The Edge)

Source: Mplus Research - 28 Jul 2022