Volatile Movements Throughout Earnings Season

Market Review

Malaysia: In tandem with the sluggish performance in the US, the FBM KLCI ended lower at 1632.63, dragged down by heavyweights like CIMB (-10.0 sen) and PMETAL (-11.0 sen). The market remains choppy as investors trade cautiously ahead of the Budget 2025 announcement and also weak regional markets’ sentiment.

Global markets: Wall Street ended higher following the rally in small cap stocks, signalling a shift out of the mega cap tech stocks into economic sensitive shares like the smaller companies. Both the European and Asian markets ended lower, dragged by disappointing LVMH results.

The Day Ahead

The FBM KLCI traded on a softer note throughout the session ahead of Budget 2025. However, some portfolio rebalancing was observed during the final hour of trading. On Wall Street, after a sharp decline due to ASML's weaker outlook, the market rebounded, buoyed by stronger-than-expected earnings from Morgan Stanley; the Dow closed at an all-time high, with sectors such as Financials, Utilities, Materials, and Industrials posting record highs. Looking ahead, traders will closely monitor AI- related stocks to assess their earnings growth. In the commodity markets, Brent crude oil extended its pullback, driven by concerns over China's demand and easing tensions in the Middle East. Meanwhile, gold prices surged past USD 2,670, and CPO prices continued to range between RM4,25-4,300.

Sector Focus: With the USD strengthening further against the ringgit, we expect traders to shift their focus towards export-oriented sectors like Gloves and Technology. Additionally, investors may want to consider sectors expected to benefit from Budget 2025, such as Construction, Property, Building Materials, and Utilities. We also see potential in selected Plantation, O&G, and Finance stocks offering attractive dividend yields

FBMKLCI Technical Outlook

The FBM KLCI index closed lower at the 1,632.63 level. Meanwhile, the technical readings on the key index are improving, with the MACD histogram turned positive, but the RSI is still below 50. The resistance is envisaged around 1,647-1,652, and the support is set at 1,612-1,617.

Company Brief

AirAsia X Bhd’s (AAX) shareholders and proxies have voted 99.08% in favour of the proposed RM6.8bn acquisition of AirAsia’s aviation business — AirAsia Bhd and AirAsia Aviation Group Ltd — from its sister company Capital A Bhd (CAPITALA). The acquisition is expected to be completed by the end of this year, subject to final court and regulatory approvals. AAX’s shareholders have also voted in favour of the proposed issuance of free warrants, private placement to raise gross proceeds of RM1bn, share capital reduction and subscription shares. (The Edge)

Crescendo Corp Bhd (CRESNDO) is buying SGR Land Development Sdn Bhd and taking on its six land purchase obligations in Johor for RM168.85m. The company will be paying RM10.79m for a 100% stake in SGR Land to sole owners Ong Soon Liong (Ong Soon Chong) and Lok Kok Lee. Meanwhile, the balance purchase price of RM158.06m will not assume any liabilities from the acquisition. The land provides access to the Second Link to Singapore, Port of Tanjung Pelepas, North-South Expressway, as well as the Senai International Airport, making it ideal for development of industrial properties. (The Edge)

Infoline Tec Group Bhd (INFOTEC) and Pappajack Bhd (PPJACK) have received approval from the Securities Commission Malaysia (SC) to transfer their listings from the ACE Market to the Main Market of Bursa Malaysia. The SC granted the approvals through a letter dated Oct 15, which both companies received on Oct 16. The approvals were issued under Section 214(1) of the Capital Markets and Services Act 2007, in addition to fulfilling the Bumiputera equity requirement for public-listed companies. (The Edge)

Construction outfit Fajarbaru Builder Group Bhd (FAJAR), which in April clinched a deal to build apartments under the first phase of WCT Holdings Bhd's (WCT) AdisonWest development in Johor Bahru, has now been awarded the contract for the second phase. The second contract, valued at RM246.09m, is for the construction of four towers comprising 896 serviced apartment units, recreational facilities, a six-storey podium with car parks, commercial lots and an apartment lobby. (The Edge)

Econpile Holdings Bhd (ECONBHD) has been awarded a RM35.11m contract to undertake bored piling, earthworks, and retaining wall and sub-structure works for an apartment project in Kuala Lumpur. The contract, awarded by WCT OUG Development Sdn Bhd, is expected to be completed within 13 months. The apartment project, comprising two 57-storey blocks with 636 units each, is located on Jalan Awan Besar, off Jalan Klang Lama. (The Edge)

Electrical and mechanical engineering firm LFE Corp Bhd (LFECORP) has secured a subcontract worth RM38.8m at the hyperscale data centre being developed in Elmina Business Park in Sungai Buloh. The contract to build a single-story data centre block with an attached office and utility rooms was awarded by Gamuda Engineering Sdn Bhd, a wholly-owned subsidiary of Gamuda Bhd (GAMUDA), to R&L Engineering Sdn Bhd. (The Edge)

Aizo Group Bhd (AIZO) has inked an MOU with NetRunner Sdn Bhd to jointly establish a Tier 4 data centre hub in Sarawak to meet the increasing demand for secure and reliable data storage and processing facilities. Formerly known as Minetech Resources Bhd, the group said the signing of this MOU also represents Aizo’s maiden venture into the data centre industry. Aizo is currently involved in various business segments, including civil engineering, bituminous products, renewable energy and financial technology. (The Edge)

Retail technology solution provider Radiant Globaltech Bhd (RGTECH) has bagged a RM25m contract from a utility company for the implementation of a hardware technical refresh project. However, it did not name the utility company it received the contract from. Radiant Globaltech said its wholly-owned subsidiaries Radiant Global ADC Sdn Bhd and Grand-Flo Spritvest Sdn Bhd have accepted a letter of award for the contract. (The Edge)

Source: Mplus Research - 17 Oct 2024