Middle East And Non-Farm Payroll In Focus

Market Review

Malaysia: The FBM KLCI (-1.03%) saw a large pullback, as banking heavyweights like PBBANK (-8.0 sen) and CIMB (-11.0 sen) dragged down sentiment on the local front; in line with the negative US overnight performance amid heightened geopolitical tension in the Middle East.

Global markets: Wall Street eked out marginal gains as the September ADP non-farm employment data came in better than expected, suggesting that the private sector job market remains strong. However, both European and Asian stock markets closed mixed amid heightened geopolitical tensions in the Middle East.

The Day Ahead

Amid rising tensions in the Middle East, the local stock exchange was negatively affected, with the FBM KLCI dropping more than 1%. Meanwhile, attention remained on China and Hong Kong markets, as the Chinese government rolled out several stimulus packages to boost the economy and stock markets. In the US, Wall Street managed to eke out marginal gains, with ADP non-farm employment data coming in better than expected. However, the upside was minimal, as market participants traded cautiously ahead of September’s payroll data. In the commodities market, Brent crude oil remained firm, trading above USD74 due to Middle East tension, but upside was limited due to larger-than-expected build up in US oil inventories. Gold prices traded along USD2,660, while CPO prices stabilized around RM4,180.

Sector Focus: Although Wall Street saw slight gains, we expect negative sentiment to persist on the local front ahead of the US non-farm payroll data. The current range of the ringgit is likely to benefit domestic-driven sectors such as Consumer. As we approach Budget 2025, we suggest investors position themselves in the Construction, Property, and Utilities sectors. Also, Oracle's plan to establish a cloud region in Malaysia, with an investment exceeding USD6.5bn, should provide a boost to the Technology sector.

FBMKLCI Technical Outlook

The FBM KLCI index closed lower around the 1,639 level. Also, the technical readings on the key index were negative, with the MACD histogram formed another negative bar, but the RSI trended below 50. The resistance is envisaged around 1,654-1,659, and the support is set at 1,619-1,624.

Company Brief

Sunway Bhd (SUNWAY) plans to buy a 17.58-acre (7.11-hectare) prime land in Taman Taynton, Kuala Lumpur, for RM320m, earmarking it for mixed-use development. The land had an estimated gross development value of RM3.2bn, and is situated adjacent to Sunway Alishan, a residential development by the group. (The Edge)

Renewable energy specialist Samaiden Group Bhd (SAMAIDEN) has bagged a RM39.17m contract to undertake a 10-megawatt LSS PV power plant in Bahau, Negeri Sembilan, in a related-party transaction. The contract was awarded by Bahau Power Sdn Bhd, which is owned by Angelaxy Power Sdn Bhd (51%) and Uzma Environergy Sdn Bhd (49%). The scheduled commercial operation date of the plant is Sept 15, 2025. (The Edge)

Econpile Holdings Bhd (ECONBHD) has secured two contracts from Sg Besi Construction Sdn Bhd, totalling RM33.3m, to carry out piling and substructure works for residential and office buildings in Kuala Lumpur. The first contract, worth RM21.3m, is related to a 51-storey serviced apartment with 653 units for Lofthill Development Sdn Bhd. Meanwhile, the second contract, valued at RM12m, is for a 59-storey office building with 350 units for Armani Development Sdn Bhd. (The Edge)

Logistics service provider Sin-Kung Logistics Bhd (SINKUNG) is diversifying into private jet charter and air freight cargo services with the acquisition of loss-making Prima Air Sdn Bhd for RM20.7m cash. Sin-Kung has entered into a share sale agreement with Tan Sri Halim Mohammad and Puan Sri Mazmin Noordin to acquire 20m shares, representing the entire equity interest in the company. (The Edge)

Information and communications technology solutions provider MMAG Holdings Bhd (MMAG) has been classified as a Guidance Note 3 (GN3) company after its external auditor, Grant Thornton Malaysia PLT, flagged material uncertainty in the company's audited financial statements for the financial year ended March 31, 2023 (FY2023) that would affect its ability to continue as a going concern. MMAG intends to submit an application for a waiver from being classified as an affected listed issuer to Bursa Securities as it has already taken relevant measures. (The Edge)

Shares in digital solutions provider Pertama Digital Bhd (PERTAMA) fell to their lowest in close to two years, prompting Bursa Securities to suspend the counter’s IDSS. The share price decline has wiped out Pertama’s market capitalisation by RM153.39m to RM701.14m. It is down 38.7% so far this year. DSS for Pertama will resume on Thursday (Oct 3) at 8.30am. (The Edge)

Bank Islam Malaysia Bhd (BIMB) has issued the second tranche amounting to RM250m under its RM5bn sukuk wakalah programme. The additional tier-1 capital sukuk wakalah, with a perpetual non-callable period of five years, has been assigned a long-term rating of A3 by RAM Rating Services Bhd. Proceeds from the sukuk issuance will be used to finance its general working capital requirements and other general corporate purposes. (The Edge)

Source: Mplus Research - 3 Oct 2024