Recovery still premature

Market Review

Malaysia:. The FBM KLCI (+0.4%) staged a mild rebound, driven by bargain hunting activities in selected oil & gas and plantation heavyweights yesterday. The lower liners also advanced, while the plantation sector (+1.9%) outperformed the mixed sectorial peers charging above SMA200.

Global markets:. Wall Street turned wobbly as Dow (-1.7%) halted a four-day winning run following the hawkish remarks from the US Federal Reserve Chair Jerome Powell. The European stockmarkets reversed all their intraday gains to close lower, but Asia stockmarkets ended mostly in green.

The Day Ahead

The FBM KLCI bounced higher as banking and commodities related stocks gained momentum. On the global front, worries over interest rate hikes resurfaced following the hawkish remarks from the US Fed Chair Jerome Powell. Closer to home, investors may turn their focus towards more defensive sectors amid intensifying volatility in the market, while eyeing the Bank Negara Malaysia’s interest rate decision tomorrow. Commodities wise, the Brent crude oil price fell towards USD83, while the CPO traded above RM4,150.

Sector focus:. Banking, REITs, and consumer could be in focus given the heightened volatility on the global markets. Besides, with the Baltic Exchange Dry Index in an uptrend move again, the transportation & logistics sector may gain traction. On the other hand, the technology sector may see some selldown following the overnight plunge on Wall Street.

FBMKLCI Technical Outlook

The FBM KLCI rebounded following a two-day decline as the key index closed above its daily EMA9 level. The technical indicators were mixed as the MACD Histogram extended a positive bar, while the RSI hovered below 50. The resistance is pegged around 1,500-1,510, while the support is located along 1,430-1,450.

Company Brief

Teladan Setia Group Bhd (TSG) is proposing to acquire a piece of freehold vacant land in Negeri Sembilan for RM24.1m. TSG wholly-owned subsidiary, Pavilion Link Sdn Bhd had entered into a sale and purchase agreement with Complete Achievement Sdn Bhd for the acquisition. The proposed acquisition of land is planned for mixed development. (The Star)

Catcha Digital Bhd had concluded its acquisition of iMedia Asia Sdn Bhd for RM43.9m, which was satisfied in cash and shares. 40.0m shares were issued and allotted at 25.0 sen each to the vendors, namely Catcha Investments Ltd and iCreative Asia Sdn Bhd. The group is also expected to have its Guidance Note 2 (GN2) status lifted after the completion of the final step in its regularisation plan, which involves a proposed rights issue that may raise up to RM41.0m. (The Edge)

Serba Dinamik Holdings Bhd’s 2QFY23 net loss narrowed to -RM89.7m, from a net loss of -RM290.3m recorded in the previous corresponding quarter on lower losses recorded in the O&M and ICT segments. Revenue for the quarter, however, shrank 40.3% YoY to RM105.8m. (The Edge)

Sime Darby Plantation Bhd plans to employ 100.0% local workers by end-2027 with a minimum wage of RM3,000. This move would help the plantation company reduce its dependency on foreign workers and propel it towards increasing mechanisation and automation on the ground. (The Edge)

FGV Holdings Bhd has proposed that the government should look into consolidating fragmented palm oil smallholders from Federal Land Development Authority (Felda), Felcra Bhd and Rubber Industry Smallholders Development Authority (Risda) under one entity so that they can meet international standards and increase profit amid increasing demand for sustainable tropical oil. Malaysian smallholders could be at risk with increased regulation, especially the new European Union’s Deforestation-free Regulation (EUDR). (The Edge)

UMW Holdings Bhd’s subsidiary UMW Toyota Motor sold a total of 9,297 vehicles in February 2023, some 37.0% more than the 6,786 units sold in the prior month. This is the company’s highest-ever MoM sales performance. On a yearly basis, the sales growth was even more impressive at 45.0% YoY. (The Edge)

Green Packet Bhd said it is selling its wholly-owned Labuan investment banking business Oasis Capital Investment Bank Ltd (OCIB) for RM23.0m. The disposal provides a timely opportunity for the group to unlock and realise the value of the investment and assets in OCIB. It is selling its entire equity interest in OCIB to WKJ Capital Equity Sdn Bhd, which is 35.0%-owned by Tan Wei Sun, and 30.0% each by Aeriel Huang and Wisen Soon, with the remaining 5.0% by Wisun Soon. (The Edge)

Source: Mplus Research - 8 Mar 2023