Downward pressure uneased

Market Review

Malaysia:. The FBM KLCI (-0.6%) registered its fourth consecutive session of decline in tandem with the mostly weaker regional markets. The lower liners, however, ended mixed, while the plantation sector (-0.9%) underperformed the mostly negative sectorial peers.

Global markets:. Wall Street remained downbeat, the Dow (-0.6%) declined as the weaker-than-expected payrolls data does not warrant enough to put a pause for the US Federal Reserve monetary tightening. The European stockmarkets closed mixed, while Asia stockmarkets ended mostly negative.

The Day Ahead

The FBM KLCI were beset by another round of selling activities after lingering mostly in the negative territory for most of the trading session, whilst foreign funds stepped up in their net selling position. For now, investors will be watching the impending release of Malaysia’s unemployment rate. The lower liners may undergo a consolidation after delivering a solid performance last week. While the recovery is still in place, we expect the upside may be limited amid quick profit taking activities. Meanwhile, we reckon that the focus will shift towards the upcoming barrage of corporate earnings in the US. Commodities wise, the Brent crude oil recovered above USD78, while the CPO price slipped towards near RM3,800.

Sector focus:. We continue to favour the defensive-related sectors such as REIT and utilities amid the volatile environment. The recovery in crude oil prices may lend some support to the energy sector. On the flipside, the plantation sector may remain downbeat in view of the softer CPO prices.

FBMKLCI Technical Outlook

The FBM KLCI formed another bearish candle to remain below EMA20 as weakness persisted throughout majority of the trading session. Technical indicators remained mixed as the MACD Histogram formed another positive bar, but the RSI hovered below 50. The immediate resistances are envisaged along 1,413-1,430, while the support is pegged around 1,370.

Company Brief

Samaiden Group Bhd's wholly owned subsidiary, Samaiden Capital Management Sdn Bhd has secured a 20-year power purchase agreement (PPA) with Yakult Malaysia Sdn Bhd. Under the terms of the agreement, Samaiden is set to supply Yakult with renewable energy generated from solar facilities located at 2 strategic locations which is Seremban, with a capacity of 496.3kWp and Glenmarie, with a capacity of 212.2kWp. (The Star)

Telekom Malaysia Bhd (TM) has appointed Datuk Zainal Abidin Putih as the telecommunication (telco) giant’s new chairman, effective 1st August 2023. This comes as the group’s current chairman Tan Sri Azlan Hashim is slated to complete his 2-year term on 31st July 2023. It also announced that the group’s current head of domestic and global wholesale business Amar Huzaimi Md Deris will be the group’s new managing director (MD) and group chief executive officer (CEO)

starting 1st August 2023, once the 3-year term of the current MD and group CEO Datuk Imri Mokhtar’s is completed at end-July 2023. (The Edge)

MyEG Services Bhd announced that the government has agreed to extend its concession as the provider of online services for the Immigration Department of Malaysia, and has appointed it as the collection agent for government revenue. MyEG received a notification letter dated 4th July 2023 from the Ministry of Finance (MoF) on 7th July 2023. The terms of the extension will be finalised pursuant to further discussion with the government in due course and an agreement to formalise the extension will be signed at a later stage. (The Edge)

Two of Serba Dinamik Holdings Bhd's subsidiaries defaulted on 3 facilities worth RM435.4m last year. The PN17 company wholly-owned unit Serba Dinamik Group Bhd (SDGB) had defaulted on payment amounting to RM400.8m provided by MBSB Bank Bhd and Bank Kerjasama Rakyat Malaysia Bhd under the Islamic Club Financing Arrangement. Following the non-payment, MBSB as the custodian bank had initiated legal proceedings against SDGB to exercise its rights as secured creditor per the financing agreements' terms. SDGB also defaulted on another facility amounting to RM34.4m provided by Affin Islamic Bank Bhd under the Tawarruq Term Financing-i facility. The winding up of SDGB triggered the event of default as the subsidiary could not pay all outstanding amounts due to Affin Bank at the time of default. (The Edge)

Zelan Bhd wholly-owned unit is being sued by its sub-contractor in the United Arab Emirates — Reliance Electro Mechanical Plumbing Contracting Co LLC (Remco) as Remco wants to enforce an arbitration award amounting to RM37.0m obtained in December 2019 in its favour. Remco claimed that Zelan Holdings (M) Sdn Bhd (ZHSB) had failed to comply with the arbitration award and is seeking an order from the High Court that the arbitration award be recognised as binding and for permission to enforce it. Zelan is engaging external solicitors to oppose the suit, for which case management has been fixed for 18th July 2023. (The Edge)

Bahvest Resources Bhd has filed a suit to annul the RM20.4m temporary resolution agreed between its wholly-owned Wullersdorf Resources Sdn Bhd and Southsea Gold Sdn Bhd, over Wullerdorf's wrongful occupation of Southsea Gold’s mining lease land. Previously, Wullersdorf agreed to pay a non-refundable deposit of RM13.0m in 2 tranches to start talks pertaining to a final compensation sum, without prejudice to Southsea Gold claiming the full demand of RM20.4m over the wrongful occupation of Southsea Gold’s land from September 2017 till April 2023. Bahvest’s suit filed with the Sandakan High Court also seeks the return of the RM6.0m Wullersdorf paid Southsea Gold on 10th May 2023 as part of its RM13.0m deposit. (The Edge)

Source: Mplus Research - 10 Jul 2023