Middle East Tensions Could Limit Gains

Market Review

Malaysia: The FBM KLCI (+0.45%) rebounded after hitting an intraday low of around 1,643, as bargain hunting emerged in selected banking heavyweights like PBBANK (+5.0 sen) and MAYBANK (+6.0 sen); boosting the sentiment on the local front. Additionally, the Health Care sector (+1.91%) was the best performer.

Global markets: The Wall Street saw a large pullback, with the Nasdaq declining the most as investors traded cautiously amid heightened conflict in the Middle East; sending the VIX higher. Meanwhile, European stock markets closed lower, while Asian stock markets ended mixed.

The Day Ahead

The FBM KLCI and FBM Small Cap rebounded accompanied by softer trading volume at the start of Golden Week, as China enters a week-long holiday. Meanwhile, US stocks declined, partly due to Iran's missile attack on Israel, which contributed to the tensions in the Middle East. We expect this selling pressure may spill over to the local market, limiting gains in the near term. Key events traders will be monitoring include non-farm payrolls and unemployment claims. In the commodities market, Brent crude oil spiked over 3% to USD 74, and gold surged above USD 2,660 due to the rising Middle East tensions. CPO prices also gained momentum, surpassing the RM 4,070 level.

Sector Focus: With the USDMYR weakening to RM 4.15/USD, export-oriented sectors like Gloves and Technology may see a mild rebound. However, the current ringgit range should benefit domestically driven sectors like Consumer. In October, we believe traders may focus on Construction, Property, and Utilities sectors ahead of Malaysia's Budget 2025, while keeping an eye on potential news about the KL- Singapore HSR project.

FBMKLCI Technical Outlook

The FBM KLCI index rebounded towards the 1,656 level. However, the technical readings on the key index were mixed, with the MACD histogram formed another negative bar, but the RSI maintained above 50. The resistance is envisaged around 1,671-1,676, and the support is set at 1,636-1,641.

Company Brief

MISC Bhd (MISC) has signed a shipbuilding contract with Samsung Heavy Industries Co Ltd for the construction of two new LNG carriers, scheduled for delivery in 2027. It also signed a letter of intent with Petronas LNG Sdn Bhd for long-term shipping services involving the new carriers, while will terminate the charters of three existing LNG carriers with the company — Seri Ayu, Seri Angkasa, and Seri Begawan — and enter into new agreements for two others, Seri Alam and Seri Amanah, upon expiry. (The Edge)

Malaysia Marine and Heavy Engineering Holdings Bhd (MHB) has secured a RM43m subcontract from a subsidiary of Uzma Bhd (UZMA) for the conversion of a mobile offshore drilling unit (MODU) into a mobile water injection facility (WIF). Under the contract, the group will handle the demolition, refurbishment, life extension, and conversion of the MODU into a mobile WIF, with the work expected to be completed by the first quarter of 2025. (The Edge)

PA Resources Bhd (PA) said its wholly owned subsidiary PA Extrusion (M) Sdn Bhd, has secured a 0% dumping rate for its aluminium extrusion exports to the US. Receiving the 0% dumping rate means that its aluminium extrusions are competitively priced and deemed to be sold at fair value in the US. (The Edge)

Tanco Holdings Bhd's (TANCO) 79%-owned subsidiary, Midports Holdings Sdn Bhd (MHSB), had received the nod from the Malaysian Marine Department (MMD) to develop a container port in Port Dickson, Negeri Sembilan. The green light was received through a full and unconditional approval letter on Monday by the MMD following the acceptance of the marine risk assessment report from MHSB. (The Edge)

Ho Hup Construction Company Bhd's (HOHUP) 52%-owned unit, Golden Wave Sdn Bhd (GWSB), has obtained an interim restraining order from the High Court in Kota Kinabalu, shielding it from legal actions by its creditors. This follows the dismissal of GWSB's application to be placed under judicial management by the High Court in Kuala Lumpur on the same day. The company now is no longer protected from legal and arbitration proceedings against it. (The Edge)

Manufacturing and construction firm Central Global Bhd (CGB) is acquiring a four- storey office and showroom space, measuring approximately 48,690 sq ft, in Kota Kinabalu, Sabah, for RM19.5m. The proposed acquisition is part of its strategy to strengthen its position as a leading construction group in East Malaysia, particularly in Sabah, and enable the group to cross-sell and expand its product offerings by stocking them in the building. (The Edge)

Sunzen Biotech Bhd (SUNZEN) is venturing into the ophthalmic industry through the acquisition of a 70% stake in Eye Nation Medical Sdn Bhd for RM6.37m. Sunzen has entered into a share purchase agreement with Eye Nation Medical’s directors Lee Peng Hwa and Lay Lee Chin for the acquisition. Eye Nation Medical mainly specialises in providing diagnostic equipment for the ophthalmic industry and related products. (The Edge)

ACE Market-listed automated test equipment manufacturer Aemulus Holdings Bhd (AEMULUS) is taking full control of its loss-making Chinese associate company Tangming Shengshi Technology (Jiashan) Co Ltd before looking for new investors to turn around the firm. Its wholly owned subsidiary Aemulus Corp Sdn Bhd has entered into an agreement with Tangren Microtelligence Technology (Jiashan) Co Ltd to acquire the remaining 60% stake in TMSS for 25m yuan (RM15.05m) cash. (The Edge)

Pharmaniaga Bhd (PHARMA) has appointed Datuk Seri Abdul Razak Jaafar as its independent and non-executive chairman, effective immediately. Abdul Razak, 60, succeeds Izaddeen Daud, 55, who has been redesignated as the group's non- independent and non-executive director. The group also announced the appointment of its non-independent non-executive director, Ahmad Shahredzuan Mohd Shariff, as the group's COO. (The Edge)

Plenitude Bhd (PLENITU) has appointed CFO Ang Kooi Yong as its new CEO, effective immediately. Ang, 58, is succeeding Lee Wee Kee, 59, who resigned on Monday (Sept 30) due to personal reasons after serving as group CEO for 19 months. She holds a Bachelor of Accounting from the University of Malaya, and is a member of the Malaysian Institute of Accountants as well as the Malaysian Institute of Certified Public Accountants. (The Edge)

Pasdec Holdings Bhd (PASDEC) has redesigned its non-executive director Johari Shukri Jamil as its group managing director, effective immediately. In May, the group appointed Liew Chai Sen as its new chief executive officer while former group managing director Tew Kim Kiat had been redesignated as its executive director. (The Edge)

Source: Mplus Research - 2 Oct 2024