Previous Day Highlights

FBM KLCI closed marginally higher with accumulation across the board. The benchmark index gained 0.22% or 3.23 points to end at 1,463.51. Gainers were led by NESTLE, GENTING and TENAGA Market breadth was positive with 495 gainers against 468 losers. Total volume stood at 3.62bn shares valued at RM2.21bn.

Key regional indices ended mostly lower. Nikkei225 and STI lost 1.46% and 0.59% to close at 31,766.82 and 3,213.58 respectively. HSI and SHCOMP dived 1.36%, and 0.82% to close at 18,329.30 and 3,150.13 respectively.

Wall Street ended lower after the release of the US Fed's minutes showed central bank officials were divided over the need for more interest rate hikes at their last meeting. The DJIA lost 0.52% to close at 34,765.74. S&P 500 and Nasdaq erased 0.76% and 1.15% to end at 4,404.73 and 13,474.63 respectively.

News For The Day

Sam Engineering’s 1Q earnings down 13%

Sam Engineering & Equipment’s 1QFY3/24 net profit fell 12.73% to RM20.5m as lower gross profit was further impacted by impairment losses as well as higher operating and finance costs. On its prospect, the group said it is increasing production rates at a steady pace as the aerospace industry works to overcome supply chain constraints to recover to prepandemic levels by 2024/2025.-The Edge Markets

SEGi’s 2Q net profit drops 80%

SEG International’s (SEGi) 2QFY23 net profit tumbled 80% to RM2.4m YoY from RM11.9m as higher expenses and finance costs further impacted lower gross profit. It said the decline in revenue and profits were mainly due to the large graduating batches of postgraduate foreign students enrolled with SEGi institutions in the previous financial year. Meanwhile, the higher costs came mainly from an increase in depreciation of right-of-use assets and lease interest expenses with the new lease terms for a few campus buildings.- The Edge Markets

Mestron’s 2Q net profit doubles on lower material price

Pole maker Mestron Holdings’s 2QFY23 net profit doubled to RM4.02m YoY, amid a reduction in raw material prices and higher sales demand for specialty poles, mainly for the telecommunication segment. The group expects its full-year performance to remain challenging following the uncertainty in the local and international economy due to the foreign exchange volatility and increase in competition with lower quality products.- The Edge Markets

VSTECS 2Q net profit rises 20%

VSTECS’ 2QFY23 net profit rose 20.28% to RM15.6m on higher forex fair gain of RM4 million, despite lower revenue. Looking forward, the group said demand for consumer ICT products will continue to drop and this worldwide trend is expected to continue into 2024. Commercial and enterprise projects are keeping their pace but there is a dearth of large public sector projects, it added.– The Edge Markets

Bursa rejects Awanbiru's request for extension of time

Bursa Malaysia has rejected Awanbiru Technology’s application for an extension of time to submit its regularisation plan, leaving the latter with a possible delisting of its securities. The reason behind the rejection is that Awanbiru has not demonstrated to the satisfaction of Bursa Securities any material development towards the finalisation and submission of the regularisation plan to the regulatory authorities. - The Star

Our Thoughts

Wall Street continues to weaken as sentiment was spooked by the Fed’s minutes which hinted of more possible rate hikes amidst the lingering inflation risks and tight labour situation. As a result, the DJI Average lost 191 points while the Nasdaq declined by 156 points as the US 10-year yield edged to another YTD high at 4.258%. Over in Hong Kong, the HSI slumped to a 3- month low following JP Morgan Chase and Barclays downgrading their growth estimates for China amid deepening economic woes and the lack of effective stimulus packages. On the domestic front, the FBM KLCI continues to chart impressive performance supported by broad based accumulation of blue chips despite the regional markets persistent decline. Nonetheless, the benchmark index YTD performance is still 2.1% lower year-on-year hence more upside for the local bourse can be expected. Though we are faced with some headwinds currently from the US and China, we believe market undertone remains strong especially from the recent upliftment of political uncertainty. For today, sentiment may remain cautious thus anticipate the index to hover between 1,455-1,465 range.

Source: Rakuten Research - 17 Aug 2023

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