Focus Will Be On The US Corporate Earnings

Market Review

Malaysia: The FBMKLCI (+0.41%) ended lower, in line with the mixed performance across the regional stock markets, as the index was dragged by Utilities and Banking heavyweights. On the broader market, the Energy sector (+0.98%) gained, while the Healthcare sector (-0.59%) declined.

Global markets: Wall Street closed mostly higher as PPI and core PPI data came in within expectations, shrugging off some fears over the earlier CPI data and the market will be focusing on the banking earnings that will be due later today. However, both the European and Asian stock markets ended softer.

The Day Ahead

The FBM KLCI snapped a 3-day winning streak prior to the public holiday heavyweights, but the FBM Small Cap managed to maintain its upward trend around the 52-week high, suggesting that the market is still bullish on the small cap. Meanwhile, the US managed to rebound led by the Technology heavyweights as PPI came in within expectations. Currently, the market will be pricing in lesser rate cuts for 2024 and focus will be shifted towards the upcoming corporate earnings that will kick off later today. Should the earnings continue to grow significantly for the AI theme, we believe the upward momentum will sustain in the US. On the commodity front, Brent oil price is hovering along USD88-91. Meanwhile, CPO price ended above RM4,300, while gold price is charging towards a fresh 52-week high above USD2,370.

Sectors focus: With the positive sentiment on Wall Street, we believe the buying interest may flow towards stocks on the local front, especially the Technology sector. Meanwhile, we like the commodity-related sectors such as the Plantation, O&G and Gold sectors amid their firm underlying commodity prices. Besides, we favour the Consumer sector for its defensive nature and firm earnings capability.

FBMKLCI Technical Outlook

The FBM KLCI index ended lower, ending a 3-day winning streak. \The technical readings on the key index were positive, with the MACD Histogram extending another positive bar, while the RSI maintains above 50. The resistance is envisaged around 1,565-1,570 and the support is set at 1,535-1,540.

Company Brief

The negotiation period for Capital A Bhd's sale of AirAsia's aviation business to AirAsia X Bhd (AAX) has been extended for the second time until April 30, 2024. Both listed companies have mutually agreed to extend the negotiation period, initially set for two months and previously extended to April 15, for the sale of aviation subsidiaries, AirAsia Bhd (AAB) and AirAsia Aviation Group Ltd (AAAGL). This proposed sale is crucial for Capital A to present a regularisation plan to Bursa Securities by June 30, as it aims to exit Practice Note 17 status due to its negative total equity position. (The Edge)

Solarvest Holdings Bhd aims to raise up to RM56.71m through a private placement, representing 6% of its enlarged share base, to finance solar power projects. The proposal involves issuing up to 40.22m shares to third parties at a yet-to-be- determined price, estimated based on a 9.62% discount to Solarvest shares' recent average price. (The Edge)

Low Swee Foong has ceased to be a substantial shareholder of TWL Holdings Bhd after selling 76.83m shares in the property development and construction firm. The transaction, which occurred on April 4, amounted to approximately RM2.3m based on the closing price of three sen per share. Low previously held a 6.09% stake in TWL Holdings, but following the sale, her shareholding has decreased to 3.32%. (The Edge)

Practice Note 17 company Sarawak Cable Bhd (SCB) and its subsidiary, Universal Cable (Sarawak) Sdn Bhd, are both facing lawsuits from two banks, Hong Leong Bank Bhd (HLB) and Hong Leong Bank Islamic Bhd (HLISB), over a total owed sum of RM95.53m. The group said it is currently in negotiations with the banks to settle the matter, and that the lawsuits are not expected to significantly impact its operations. (The Edge)

Tycoon Tan Sri Vincent Tan is reportedly exploring the possibility of privatising Berjaya Food Bhd, which owns Starbucks Corp’s Malaysian operations. While talks with banks for financing are underway, sources say that Tan, who holds an interest of 55% in Berjaya Food through Berjaya Corp, may still decide against the go-private deal. (The Edge)

Source: Mplus Research - 12 Apr 2024