Navigating The Market Ahead Of Budget 2025

Market Review

Malaysia: Following Wall Street's rebound, driven by expectations of a Fed rate cut in November after the PPI data came in cooler-than-expected, the FBM KLCI closed higher at 1,636, supported by gains in PBBANK (+8.0 sen) and CDB (+5.0 sen). Meanwhile, investors traded cautiously ahead of this Budget 2025 announcement.

Global markets: As geopolitical tensions in the Middle East faded, Wall Street extended its gained buoyed by the heavyweights like NVIDIA (+2.43%) and AAPL (+1.65%). The European market ended higher, while Asian markets closed mixed, as global trade risks could escalate due to rising tensions in the South China Sea.

The Day Ahead

Trading activity has turned cautious ahead of Budget 2025, but the attention was on Public Bank following last week's selldown, leading to a rebound in the Finance sector. In the US, Wall Street continued to gain momentum, driven by the Technology sector; Nvidia hit new highs as investors bet on strong demand for its next- generation Blackwell AI processors. On the economic data front, investors are watching key reports, including (i) US retail sales, (ii) US unemployment claims, China’s GDP, China industrial production, and China retail sales. In the commodity market, Brent crude oil plunged as tensions in the Middle East eased, while gold prices remained steady around USD2,650. The crude palm oil continued its upward trend, staying above RM4,200.

Sector Focus: We expect traders to be selective ahead of Malaysia’s Budget 2025 announcement this Friday, with key focus areas likely to include the Construction, Property, Building Materials, and Utilities sectors. Meanwhile, we foresee heightened volatility in the Consumer sector, as traders are speculating on subsidy cuts in the poultry segment. Also, the strengthening US dollar is likely to shift attention towards export-oriented sectors such as Gloves and Technology.

FBMKLCI Technical Outlook

The FBM KLCI index closed higher at the 1,636 level. Meanwhile, the technical readings on the key index are improving, with the MACD histogram turned positive, but the RSI trended below 50. The resistance is envisaged around 1,651-1,656, and the support is set at 1,616-1,621.

Company Brief

Genting Malaysia Bhd's (GENM) unit in the US has been named in a complaint filed by RAV Bahamas Ltd in the US District Court Southern District of Florida. The complaint, filed on Oct 7, named GenM’s indirect wholly owned subsidiary Genting Americas Inc, which is involved in the operations of Resorts World Bimini in the Bahamas, of which RAV Bahamas is seeking damages of more than US$600m (RM2.57bn). The company, however, did not elaborate on the damages that were filed by the plaintiff. (The Edge)

Mr DIY Group (M) Bhd's (MRDIY) largest shareholder, Bee Family Ltd, offloaded 71.7m shares, representing a 0.76% stake in the home improvement retailer, for a total of RM149.37m via direct business transaction. Following the disposal, Bee Family’s stake in Mr DIY was reduced to 50.11% (50.87% previously). Bee Family is the investment vehicle of Mr DIY founder Tan Yu Yeh, who also holds 20m direct shares, or a 0.21% stake in the group. (The Edge)

Shareholders of Capital A Bhd (CAPITALA) have approved the proposed disposal of its aviation business, worth some RM6.8bn, to AirAsia X Bhd (AAX). The disposal resolutions were passed with shareholders and proxies attending the meeting holding 99.97%, voting in favour. The other key resolution, involving the distribution of AAX shares or 73.33% of the total AAX shares that Capital A would receive from the proposed disposal to its shareholders, was also passed with 99.97% voting in favour. (The Edge)

Sungei Bagan Rubber Co (Malaya) Bhd (SBAGAN) has proposed a dividend of 8 sen per share for FY2024. The proposed payout includes a single-tier first and final dividend of 2 sen per share, along with a single-tier bonus dividend of 6 sen per share. The ex-dividend date is set for Dec 12, 2024 for both dividends, with the payment to be made on Jan 2, 2025. Sg Bagan also announced the emergence of property developer Kuchai Development Bhd (KUCHAI) as a substantial shareholder, signifying that they have completed the earlier proposed asset and liability acquisition deal between the companies. (The Edge)

Meanwhile, Kuchai announced that it has become a cash company following the completion of its disposal of assets and liabilities to Sungei Bagan. Kuchai received notification from Bursa Securities on Monday, stating that the company triggered Paragraph 8.03(1) of the Main Market listing requirements. Under this rule, a listed issuer is considered a cash company if 70% or more of its consolidated assets consist of cash, short-term investments or a combination of both. (The Edge)

Ho Hup Construction Company Bhd's (HOHUP) 52.5% indirect subsidiary, Golden Wave Sdn Bhd (GWSB), has been served with a winding-up petition by Eko Bina Sdn Bhd over a payment dispute tied to a serviced apartment and retail units project in Kota Kinabalu, Sabah. The petition stems from an adjudication ruling made in December last year, which awarded Eko Bina, a wholly owned subsidiary of Ecobuilt Holdings Bhd (ECOHLDS), RM23.16m in its dispute with GWSB concerning payments owed during the construction process. The petition hearing is scheduled for Nov 18. (The Edge)

ACE Market-listed Critical Holdings Bhd (CHB) has bagged a RM62.5m contract from IJM Corp Bhd (IJM) to provide mechanical and electrical services for a semiconductor plant in mainland Penang. Its wholly owned subsidiary Critical M&E Engineering Sdn Bhd will undertake the supply and maintenance of mechanical and electrical services for the new semiconductor plant — for a renowned US-based multinational company — located at the Batu Kawan Bandar Cassia Technology Park in Prai. However, it did not name the multinational company. (The Edge)

Fajarbaru Builder Group Bhd (FAJAR) will pay Penang Development Corp (PDC) RM111.45m to undertake a joint development of a medical city and mixed development hub in Bandar Cassia, Batu Kawan. The payment is for the purchase of land measuring 51.17 acres, for the Medi-City development. That purchase is 'part one' of the purchase and development arrangement totalling 235.8 acres that it has signed with PDC in June 2023. The 235.8-acre Medi-City master plan will encompass a wellness village, medical education hub, hybrid health-tech park as well as a waterfront commercial centre, Fajarbaru Global Park and seaview residence. (The Edge)

Property developer BCB Bhd (BCB) has acquired four parcels of freehold land in Kluang, Johor, spanning a total of 54.71 acres, for RM31m, cash. It has signed four sale and purchase agreements with Country Green Realty Sdn Bhd for the acquisition. BCB intends to develop residential units and retail shops on the site that is expected to have a gross development value of RM245m upon full completion. (The Edge)

Pan Malaysia Holdings Bhd (PMHLDG), now trading under the name of Exsim Hospitality Bhd, has secured a RM47.4m subcontract to provide interior design fit- out works to guest rooms at an office property in Damansara Perdana. The group said its wholly owned subsidiary, Exsim Concepto Sdn Bhd, received the letter of award from Discovery Media Sdn Bhd for the subcontract under a project involving the development of 560 office units. (The Edge)

Property developer Tanco Holdings Bhd (TANCO) is forming an 80:20 joint venture with Menteri Besar Negeri Sembilan (Inc) to develop an industrial park in Port Dickson. The park, provisionally named the Port Dickson Free Zone, will be developed on 575 acres of land currently owned by SD Guthrie Bhd (SDG). The collaboration will focus on acquiring the land and executing the development, which is expected to include warehouses, factories and other infrastructure, subject to approval from relevant authorities. (The Edge)

Source: Mplus Research - 15 Oct 2024