Dipped along with regional markets

Market Review

Malaysia:. The FBM KLCI (-1.3%) extended its decline with 26 out of 30 key index components closed in red, mirroring the weakness on Wall Street overnight. The lower liners also fell, albeit coming off from their intraday lows, while all the 13 major sectors on the broader market closed in the negative territories.

Global markets:. Wall Street chalked in modest gains as the Dow (+0.1%) rose after the Producer Price Index in August 2022 cooled down to record +8.7% YoY rise vs. +9.8% YoY in the prior month; implies easing inflationary pressure. The European stock markets stayed downbeat, while Asia stock markets closed mostly in red.

The Day Ahead

The FBM KLCI witnessed another wipe-out along with the regional peers on the back of inflation-induced rout. We believe market should remain volatile at least until the FOMC meeting which will be held next week as investors will be waiting for more clarity from the Fed’s Chairman Jerome Powell going forward on the interest rate decision; currently the market is pricing in a 75-basis point rate hike. Meanwhile, geo-political uncertainties could be capping the upside reward at this juncture. Commodities wise, the crude oil ticked up to USD94 per barrel mark, while the CPO traded above RM3,800.

Sector focus:. With the Baltic Dry index up for the sixth straight session to a nearly six-week high, we are optimistic on the transportations & logistics sector. Besides, the banking sector should remain robust amid the interest rate upcycle environment. The technology sector may see mild rebound following Nasdaq’s overnight gains, but upside reward might be limited.

FBMKLCI Technical Outlook

The FBM KLCI tumbled below its immediate support yesterday at 1,485. Technical indicators remained negative as the MACD Histogram extended a negative bar, while the RSI hovered below the 50 level. Next support is located at 1,465, followed by the 52-week low around 1,410, while the resistance is pegged along 1,480-1,500.

Company Brief

Ranhill Utilities Bhd’s indirect subsidiary, Perunding Ranhill Worley Sdn Bhd (PRW), has received a letter of award (LOA) from PTTEP HK Offshore Ltd for the provision of front-end engineering design (FEED) services for offshore facilities for SK410B Lang Lebah Development in Sarawak worth RM43.0m. Duration of work is 8 months, commencing from the date of kick-off meeting on 22nd July 2022. (The Star)

Rubberex Corp (M) Bhd has obtained its shareholders' approval for the proposed acquisition of 100.0% equity interest in Reszon Diagnostics International Sdn Bhd for RM180.0m. Its shareholders also approved the proposed diversification into the healthcare business and proposed change of name to Hextar Healthcare Bhd. The inter-conditional proposals are expected to be completed within the year. (The Star)

Genting Bhd's 50.0% indirectly owned associate Resorts World Inc Pte Ltd is buying the entire stake in cruise trademarks owner Star Market Holdings Ltd for USD3.5m (RM15.8m) from Genting Hong Kong Ltd's 100.0%-owned subsidiary Star Cruises Asia Holding Ltd in a planned transaction that aims to, among others, consolidate the ownership of such trademarks and intellectual property rights under a single entity. (The Edge)

UMW Holdings Bhd's automotive sales jumped by 40.6% MoM in August 2022, driven by both UMW Toyota Motor Sdn Bhd and UMW's associate company, Perusahaan Otomobil Kedua Sdn Bhd (Perodua). The automotive group delivered 35,130 units in August 2022, compared with 24,983 units registered in July 2022. (The Edge)

KIP Real Estate Investment Trust (REIT) has announced that the increase in costs due to inflationary pressures has had a negative impact on mall tenants' profit margins. However, the impact on tenants of KIP REIT's malls is less because they are mainly small and medium store operators that provide essential goods. (The Edge)

Maxis Bhd is working closely with its 5G Alliance partners on initiatives to create and commercialise 5G use cases and Internet of Things solutions across industries in Malaysia and Asia-Pacific. (The Edge)

Cosmos Technology International Bhd, which is scheduled to be listed on Bursa Malaysia's ACE Market on 6th October at 35 sen a share, plans to raise about RM22.4m from its initial public offering, which involves a public issue of 64.1m new shares. Cosmos plans to use the gross proceeds to finance, among others, the acquisition of a new building and purchase of new machinery. (The Edge)

Pos Malaysia Bhd has inked a memorandum of understanding (MoU) with online marketplace Ejazmine Sdn Bhd to explore collaboration in logistics and courier services. The MoU will enable both parties to help local small and medium enterprises reach global markets and local domestic distribution. (The Edge)

Nexgram Holdings Bhd is planning to consolidate every 10 shares in the ACE Market-listed telecommunications and media firm into 1 new share. Upon the completion of the consolidation, Nexgram will see its number of issued shares to be between 441.4m and 573.9m depending on the subscription of outstanding warrants. (The Edge)

Eco World International Bhd’s (EWI) 3QFY22 net loss stood at RM56.7m vs. a net profit of RM2.5m recorded in the previous corresponding quarter, amid lower profit contributions from projects in Australia and losses from joint ventures due to revision of profit margins on EW London's build-to-rent projects as a result of an extended construction programme. Revenue for the quarter dropped 72.9% YoY to RM34.5m. (The Edge)

Source: Mplus Research - 15 Sept 2022