Positive Budget May Boost Market Sentiment

Market Review

Malaysia: The FBM KLCI (+0.28%) extended its gains, boosted by buying pressure from Utilities and Industrial Products & Services heavyweights, namely YTL (+6.0 sen) and PMETAL (+8.0 sen), prior to the Budget 2025 announcement. Overall, all sectors closed in positive territory, with technology (+1.35%) gaining the most.

Global markets: In tandem with the resilient economic data last Thursday, Wall Street rebounded, buoyed by Nasdaq heavyweights like NFLX (+11.1%) after posting better-than-anticipated earnings. The European market gained momentum, while the Asian market rebounded as China’s GDP data came in stronger.

The Day Ahead

Wall Street ended on a positive note following Netflix’s stronger-than-expected Q3 earnings. We believe that the strong performance in the technology sector, combined with positive sentiment from Budget 2025, may provide buying support in the local market. This week, traders will be closely watching the following key events: (i) US unemployment claims, (ii) Flash manufacturing and services PMI, (iii) durable goods orders, and (iv) consumer sentiment reports. In the commodities market, Brent crude oil continues to trend lower due to weaker demand forecasts from OPEC and the IEA, as well as easing geopolitical tensions in the Middle East. Meanwhile, gold prices surged toward record highs. CPO prices remained within the RM4,250- 4,300 range, continuing their upward trend.

Sector Focus: Following Budget 2025, we expect buying support to extend in the Construction and Property sectors, particularly the latter due to property tax relief initiatives. We also favour the Utilities sector, as more green-related initiatives were highlighted in Budget 2025, leading to potential trades in the renewable energy and sub-utilities segments. Additionally, with increased emphasis and investment in the semiconductor and E&E sectors, we expect buying interest in the technology sector. Finally, we see potential in stocks linked to Johor, Sabah, and Sarawak.

FBMKLCI Technical Outlook

The FBM KLCI index rebounded towards the 1,645 level. Meanwhile, the technical readings on the key index are improving, with the MACD histogram extended another positive histogram, and the RSI has hooked above 50. The resistance is envisaged around 1,660-1,665, and the support is set at 1,625-1,630.

Company Brief

HeiTech Padu Bhd (HTPADU), whose share price hit a record high of RM4.40, announced that it has won an RM892.2m National Integrated Immigration System (NIISe) project. This confirms The Edge Malaysia weekly’s report last month that the technology company had made a comeback and stood a good chance of winning the contract, quoting sources. HTPADU will also have to submit to the government a performance bond amounting to RM8.92m not exceeding 30 days from the date of receipt of the letter of award. (The Edge)

Exsim Hospitality Bhd (EXSIMHB), previously known as Pan Malaysia Holdings Bhd, said its wholly-owned subsidiary Exsim Concepto Sdn Bhd has won a sub-contract work package for RM60m. The work package, which is awarded by Totalbuildz Sdn Bhd, involves the designing and building of architecture, as well as interior design and fit-out works to 294 rooms in the Building E of Empire City at Damansara Perdana, Selangor. The contract will begin from Oct 18, subject to further confirmation by the main contractor. (The Edge)

Sorento Capital Bhd's (SORENTO) initial public offering (IPO) saw strong demand, with the 43m shares available to the public being oversubscribed by 39 times at an offer price of 37 sen per share. The ACE Market-bound bathroom and kitchenware distributor’s IPO involved a total of 229m shares, comprising 155m new shares and an offer for sale of 74m shares. Sorento is scheduled to be listed on the ACE Market on Oct 28, with an estimated market capitalisation of RM318m. (The Edge)

OB Holdings Bhd (OBHB), slated for listing on the Ace Market of Bursa Malaysia on Oct 29, announced that the 19.58m new shares it offered to the Malaysian public under its IPO have been oversubscribed by 109.47 times. The food and supplement maker’s IPO offered a total of 120m new shares, with a large portion of 92.59m done through private placements. (The Edge)

Source: Mplus Research - 21 Oct 2024