Commodities Spike – A Boon For Bursa Exchange

Market Review

Malaysia: The FBM KLCI (+0.37%) ended higher, despite with the mostly negative performance in the regional stock markets, boosted by selected Industrial Products, Plantation and Telco heavyweights. On the broader market, the Energy sector (+1.24%) was the leading sector, while the Utilities sector (-0.54%) declined.

Global markets: Wall Street ended lower as February’s PPI index data came in higher at 0.6% beating consensus expectations at 0.3%, which may further delay the timing of rate cuts. However, the negative inflation momentum was partially offset by some strong corporate earnings. Both the European and Asian stock market ended lower.

The Day Ahead

The FBM KLCI closed higher in tandem with most of the Asian stock markets’ performances as led by Plantation and Telco heavyweights. Meanwhile, Wall Street ended softer as the core PPI and PPI data spiked 0.3% and 0.6% MoM against forecasts of 0.2% and 0.3%, respectively, while core retail sales rose 0.3% MoM as compared to forecast of 0.5%. Most of the data could point to slower growth in consumption activities and slightly more hawkish tone by the Fed, which may contribute to a delay in interest rate cut going forward. On the commodity markets, Brent oil inched higher above the USD85/bbl level due to an improved US demand outlook following a higher-than-expected decline in US crude inventories as well as ongoing geopolitical risk.

Sectors focus: Despite the slight decline in the US, we expect the positive sentiment on the local front to sustain with the traders focusing on commodities related stocks within the Plantation and O&G. Besides, we like the Construction and Property sectors for the potential revival of KL-SG HSR, while investors may continue to position within the defensive Consumer sector.

FBMKLCI Technical Outlook

The FBM KLCI index ended higher with a bullish engulfing bar above the EMA20 level. The technical readings on the key index were mixed, with the MACD Histogram hovering near 0, while the RSI is above 50. The resistance is envisaged around 1,555- 1,560 and the support is set at 1,525-1,530.

Company Brief

CTOS Digital Bhd's wholly-owned CTOS Data Systems Sdn Bhd (CDS) has applied for a stay of execution of a High Court judgement after CDS was ordered to pay damages to its client over inaccurate negative credit rating. CDS has also lodged a notice of appeal to the Court of Appeal over the High Court’s judgement. (The Edge)

Awanbiru Technology Bhd has won a legal suit against the government over the termination of the RM3.5bn National Immigration Control System (SKIN) project. The High Court ruled in favour of Awantec's wholly-owned unit, Prestaring Skin Sdn Bhd (PSKIN), and ordered the government to pay a judgment sum of RM231.55m, with a post-judgment interest of 5% per annum, and cost of RM80,000, subject to final legal fees. (The Edge)

Boustead Heavy Industries Corp Bhd has received a contract extension on Feb 26 from the Ministry of Defence Malaysia (Mindef) worth RM3.5m. The extension, for submarine facilities upkeep, is for a contract period of 45 days from Jan 1 until Feb 14. The contract was initially awarded to BSES in May 2023 at a contract value of RM40.26m for a period of 12 months from Jan 1, 2023 until Dec 31, 2023. (The Edge)

Oil-and-gas services firm Icon Offshore Bhd has secured a contract to provide an accommodation workboat to Petrolanpan Sdn Bhd for an undisclosed amount. The contract will span 45 days, with the option to extend for an additional 15 days. Petrolanpan has selected Icon Kayra, the group accommodation workboat for hook- up and commissioning work activities. (The Edge)

Energy infrastructure and marine services provider Coastal Contracts Bhd has ventured into the tourism industry by acquiring an 82% equity interest in a company undertaking an overwater resort in Sabah for RM18.98m. It acquired the stake in Jewel of Mabul Development Sdn Bhd (JOMD) by acquiring 100,000 shares in the company from Richard Christopher Barnes and subscribing for another 1.72m shares. Coastal Contract will inject RM50m in the form of share subscription in JOMD to develop Phase 1 of the resort project. (The Edge)

Piling and foundation specialists Econpile Holdings Bhd has secured a contract worth RM83m to undertake sub-contract earthworks from BRDB Developments Sdn Bhd. The project, to be completed within 18 months, is for the proposed development of 146 units of villa residences, including common facilities and club house in Taman Duta, Bukit Tunku, Kuala Lumpur. (The Edge)

HeiTech Padu Bhd saw Datuk Farhash Wafa Salvador emerge as a new substantial shareholder with an indirect interest of 15.9% or 16.1m shares, which were acquired earlier this week. Farhash has deemed interest in the company via a private vehicle Rosetta Partners Sdn Bhd, which bought 9.69m shares on Tuesday (March 12) and 6.16m shares on Monday. The acquisition price was not disclosed, but according to Bloomberg data, 9.69m HeiTech shares crossed off market at RM2.15 apiece on Tuesday, a 27% discount versus the stock’s closing price of RM2.95 on the same day. (The Edge)

Bermaz Auto Bhd has secured the rights to sell XPeng vehicles and spare parts in Malaysia, and to provide after-sales services for the Chinese electric vehicle (EV) marque. The distributorship was awarded by Shenzhen Xiaopeng Motors Supply Chain Management Co Ltd (Shenzhen XPeng) and Guangzhou Xiaopeng Motors Trading Co Ltd (Guangzhou XPeng). Both Shenzhen XPeng and Guangzhou XPeng are affiliates of Guangzhou Xiaopeng Motors Technology Co Ltd (XPeng Motors), the manufacturer of the XPeng marque smart EVs that is headquartered in Guangzhou, China. (The Edge)

The public portion of Prolintas Infra Business Trust’s initial public offering (IPO) of 27.5m units was oversubscribed by 3.59 times after receiving a total of 7,211 applications for 126.17m units, with a total value of RM119.9m. The Bumiputera portion received a total of 2,881 applications for 32.34m units, representing an oversubscription rate of 1.35 times, while 4,330 applications for 93.83m units were received under the other Malaysian public portion, representing an oversubscription rate of 5.82 times. (The Edge)

Source: Mplus Research - 15 Mar 2024