Volatility regain control

Market Review

Malaysia:. The FBM KLCI (-1.0%) trended lower with more than two-thirds of the key index components finished lower prior to the extended weekend break. The lower liners, however, ended mixed, while the transportation & logistics sector (+0.7%) was the sole outperformer among the sectorial peers.

Global markets:. Wall Street remained downbeat as the Dow (-0.3%) fell for the fourth straight day, dragged by the on-going concern over the monetary tightening by the US Federal Reserve and the escalating geopolitical risks in the Russia Ukraine war. Both the European and Asia markets also were also painted in red.

The Day Ahead

Another wave of selling pressure hit the FBM KLCI on Friday as investors mulled over the Budget 2023 and bearish sentiment on the regional markets. We believe all eyes will turn to the upcoming GE15 following the dissolution of parliament announced yesterday. The broad market may trade lower given the uncertainties ahead of the GE15, while foreign investors may extend its selling activities since last week. Commodities wise, the crude oil price sustained above USD94 per barrel mark, while the CPO price continued to hover above RM3,750.

Sector focus:. The broader market may attract selling pressure with the dissolution of parliament, but the investors will focus on GE15 theme, and may shift their attention to sectors such as construction, utilities, as well as selected government related stocks. Besides, the bullish crude oil price may add shine to the energy stocks. On the other hand, the technology sector could see further selldown as Nasdaq slid to close at 2-year low.

FBMKLCI Technical Outlook

The FBM KLCI tumbled and closed below its daily EMA9 level after spending the entire session in the negative territory. Technical indicators remained mixed as the MACD Histogram extended a positive bar, while the RSI hovered below 50. The resistance is pegged along 1,430-1,450, while the support is pegged at 1,385-1,400.

Company Brief

Four mobile network operators (MNOs) — Celcom Axiata Bhd, Digi Telecommunications Sdn Bhd, YTL Communications Sdn Bhd and Telekom Malaysia Bhd (TM) have executed share subscription agreements (SSAs) to collectively take up a 65.0% stake in Digital Nasional Bhd, while Maxis Bhd and U Mobile Sdn Bhd have opted out. Celcom Axiata and Digi Telecommunications are units of Axiata Group Bhd and Digi.Com Bhd, respectively. YTL Communications is a unit of YTL Power International Bhd. The SSAs give effect to the MNOs' subscription of 65.0% equity in DNB with Celcom Axiata (12.5%), Digi Telecommunications (12.5%), YTL Communications (20.0%), and TM (20.0%). (The Edge)

Datuk Wira Ng Chun Hau, who was executive chairman of Caely Holdings Bhd from February 2021 to May 2022, has denied the allegations of misappropriation of funds amounting to RM30.6m involving its wholly owned subsidiary Caely (M) Sdn Bhd during his tenure. On 5th October 2022, Caely announced that its new board of directors had lodged a police report against 12 of its former directors. (The Edge)

Top Glove Corp Bhd is halting its dividend payout to preserve cash holdings, after its plant utilisation rate declined from 52.0% in 2QFY22 to 35.0% in 4QFY22, amid low average selling prices and competitive glove prices from China. (The Edge)

NCT Alliance Bhd has proposed a private placement to raise up to RM48.4m to fund property development activities and for working capital. The proposed private placement entails the issuance of up to 120.9m new shares, representing 10.0% of total issued shares, to person(s) to be identified at a later date. (The Edge)

Paragon Union Bhd has proposed to diversify its existing core business to include recycling business, focusing on metal initially, to broaden its revenue stream and earnings base and reduce its dependency on its existing core business. (The Edge)

Source: Mplus Research - 11 Oct 2022