Previous Day Highlights

The FBM KLCI ended in negative territory as investors continued to take profit. The benchmark index lost 0.46% or 6.68 points to close at 1,444.56 with losers led by NESTLE, QL and PETGAS. Market breadth was negative with 555 losers against 348 gainers. Total volume stood at 2.8bn shares valued at RM1.88bn.

Key regional markets closed broadly lower following negative cue from Wall Street yesterday. Nikkei 225 and STI lost 2.3% and 1.45% to close at 32,707.69 and 3,325.02. HSI and SCHCOMP declined 2.47% and 0.89% to end at 19,517.38 and 3,261.69 respectively. Wall Street ended sharply lower as Fitch downgraded the US government's credit rating. The DJIA lost 0.98% to close at 35,282.52. S&P 500 and Nasdaq eased 1.38% and 2.17% to end at 4,513.39 and 13,973.45 respectively.

News For The Day

Mudajaya secures ECRL works worth RM195.1 m

Mudajaya Group has secured a contract worth RM195.1m for works related to the East Coast Rail Link (ECRL) in Terengganu from the development's main contractor, China Communications Construction (ERCL) SB. Mudajaya had accepted the letter of award on Aug 1, 2023, to undertake the construction and completion of stations, ancillary buildings and other associated works for the rail project. The project is targeted to be completed by 2025, with a construction period of 32 months from the date of site possession.-The Edge Markets

Nova MSC bags RM7m contract extension in Singapore

Nova MSC has secured a contract extension worth RM7m from Singapore’s Land Transport Authority. The company said the contract is for the extension of the operation and maintenance (O&M) services for the enterprise registry & archival (ERA) system, which includes the provision of professional services for service requests, for another three years from Jan 27, 2024 to Jan 26, 2027.– The Star

Bursa Securities rejects GIIB's private placement

Bursa Securities has rejected GIIB Holdings’ proposed private placement, citing pending charges against several of its directors under the MACC Act 2009. Earlier this year, MACC had charged CEO Tai Boon Wee and executive director Wong Ping Kiong under Section 18 of the MACC Act for allegedly furnishing fake documents to auditor Grant Thornton Malaysia PLT. - The Edge Markets

Datasonic anticipates challenging FY3/24

Datasonic Group anticipates the FY3/24 to be challenging, amid the elevated market ambiguities arising from ongoing macroeconomic issues. Following the security-related integrated information and communications technology solutions provider's annual general meeting, executive deputy chairman Datuk Abu Hanifah Noordin nevertheless said the company is resolute in pursuing its strategic plans with prudent management.-The Edge Markets

AMMB in talks over MetLife Malaysian arm sale

AMMB Holdings has begun preliminary discussions with Great Eastern Holdings Ltd over the sale of MetLife Inc’s Malaysian venture. The transaction could value AmMetLife, which the US company jointly owns with Kuala Lumpur-listed AMMB, at US$250m (RM1.13bn) to US$300m (RM1.36bn), said Bloomberg.- The Edge Markets

Our Thoughts

Wall Street finally loses steam following Fitch’s downgrade on the US sovereign rating from AAA to AA+ thus sparking a massive sell-off. As a result, the DJI Average lost 348 points while the Nasdaq declined by 310 points as the US 10-year yield inched higher at 4.09%. Over in Hong Kong, the HSI slumped by almost 500 points on concerns over China’s property sector after July’s home sales came in worse than expected. Sentiment was further eroded as domestic banks were roped in to adjust existing mortgage rate and trim down payment ratios to assist the ailing property sector. On the home front, the FBM KLCI retreated further as sentiment turned cautious attributed to widespread decline amongst the regional markets. Though we reckon market sentiment may have been affected by the US downgrade, we believe this present an excellent opportunity to bargain hunt as judging by the last US rating downgrade in 2011, we noticed the equity markets did not experience any prolonged negative reaction. Therefore, we expect the index to hover within the 1,440-1,450 range today.

Source: Rakuten Research - 3 Aug 2023

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