Persistent foreign fund outflow

Market Review

Malaysia:. The FBM KLCI ended on a flattish note amid the lack of fresh leads, while any recovery was capped by the selling pressure from foreign funds in recent days. The lower liners, however, ended mixed, while the energy sector (-1.1%) underperformed after snapping a 5-day winning streak.

Global markets:. Wall Street remained downbeat as the Dow (-1.0%) was rocked by banking giants’ corporate leaders remarks over a potential gloomy economic outlook amid the rising interest rates environment. The European stockmarkets extended their decline, while Asia stockmarkets closed downbeat.

The Day Ahead

The FBM KLCI closed flat as the investors stayed cautious taking cue from the negative Wall Street performance. Moreover, we expect traders to remain on the sidelines ahead of the US CPI data next week, coupled with the FOMC meeting. Defensive stocks with solid track record in their earnings should be favourable under this challenging environment. Commodities wise, the Brent crude oil price tumbled towards USD79 per barrel, while the CPO price climbed above RM4,000 as Indonesia plans to boost its biofuel mandate, which could lower down the palm oil inventory level.

Sector focus:. Given the selldown on Wall Street, the technology sector may see selling activities returning, while the falling Brent oil price could limit the upside potential in the O&G sector. However, we like consumer stocks for its defensive characteristic and traders may look at selected stocks under the medical and building material sectors as the momentum is building up.

FBMKLCI Technical Outlook

The FBM KLCI closed flat and still ended below the EMA9 level. Technical indicators remained mixed as the MACD Histogram extended a negative bar, while the RSI is hovering above 50. Support is envisaged along 1,450-1,460, while the resistance is set at 1,500-1,510.

Company Brief

Axiata Group Bhd has declared a special tax-exempt dividend of 4.0 sen per share for FY2222, pursuant to the successful completion of the Celcom-Digi merger. The dividend will be taken out of the cash proceeds of RM2.50bn received from Digi.com Bhd and RM300.0m from Telenor Asia Pte Ltd in accordance with the terms of the share purchase agreement and master transaction agreement. The bulk of the cash proceeds from the merger exercise will go towards strengthening the group's balance sheet by paring down debt. (The Star)

Scientex Packaging (Ayer Keroh) Bhd’s 1QFY23 net profit increased 25.3% YoY to RM12.3m, due to lower raw material prices and favourable product mix. Revenue for the quarter climbed 18.6% YoY to RM213.9m. (The Star)

Capital A Bhd has issued a clarification that the proposed plan announced recently is not a merger of AirAsia Bhd and AirAsia X Bhd, but a potential disposal of Capital A’s aviation assets to AirAsia X. The exercise is aimed at forming a separate publicly-quoted aviation group, comprising 6 airlines; 4 short-haul Asean airlines and 2 medium-haul airlines, namely AirAsia, Thai AirAsia, AirAsia Indonesia, AirAsia Philippines, AirAsia X and Thai AirAsia X. (The Edge)

The upper limit price of Comintel Corp Bhd’s shares has been frozen at 69.0 sen by Bursa Malaysia, after the stock hit limit up for 2 consecutive trading days. Comintel surged as much as 30 sen or 333.3% to 39 sen on 5th December 2022, after Bursa lifted the trading suspension of the stock, following the completion of its regularisation plan. The counter continued its rally on 6th December 2022 to close another 30 sen or 76.9% higher at 69 sen, with some 6.4m shares exchanging hands. (The Edge)

CN Asia Corp Bhd has trimmed its stake in Zen Tech International Bhd to 1.1%, from 6.7% previously. This came about after the company disposed of 19.0m Zen Tech shares on 2nd December 2022 and another 26.6m shares on 5th December 2022The disposal consideration was based on the market price of 3.5 sen per share. (The Edge)

MN Holdings Bhd had secured a RM43.5m contract from Tenaga Nasional Bhd (TNB) to replace parts of a substation in Penang. Its wholly-owned subsidiary MN Power Transmission Sdn Bhd, and joint venture (JV) partner Zafas Sdn Bhd has been appointed by TNB as the main contractors of the gas-insulated substation in situ replacement project, and the contract entails the completion in 790 days from the commencement date on 5th December 2022. (The Edge)

Dagang NeXchange Bhd (DNeX) announced the resignation of its independent and non-executive chairman Tan Sri Abdul Rahman Mamat, citing to be in line with good corporate governance practices and to pursue other corporate interests as the reason for his resignation. The company was embroiled in legal disputes over its 60.0% investment in semiconductor wafer foundry SilTerra Malaysia Sdn Bhd. (The Edge)  

Jiankun International Bhd’s unit has been slapped with a notice of demand from Fivestar Development (Puchong) Sdn Bhd for RM13.0m linked to a joint venture agreement for the development of a residential property in Petaling, Selangor. FiveStar is seeking the payment in unpaid sums owed by Jiankun’s unit JKI Development Sdn Bhd pursuant to the joint venture agreement dated 28th July 2015 and a supplementary agreement dated 5th October 2016. (The Edge)

LB Aluminium Bhd’s 2QFY23 net profit increased 80.8% YoY to RM12.4m, thanks to higher average selling prices and improved margin in its aluminium products segment. Revenue for the quarter rose 29.7% YoY to RM206.1m. (The Edge)

Source: Mplus Research - 7 Dec 2022