Key blue chips latched on to strong window-dressing gains for a second day Thursday as the broader market closed mixed. The KLCI added 7.63 points to settle at 1,637.93, off an early low of 1,625.82 and high of 1,640.53, as losers narrowly edged gainers 371 to 370 on higher total turnover of 1.76bn shares worth RM1.4bn.

Resistance at 1,641, Next Hurdle at 1,657/1,662.

As buying momentum picks up in small cap oil & gas related stocks on recovery play, the benchmark index should be buoyed by late window-dressing support on the last trading day for the year. While immediate resistance is retained at the 50-day moving average at 1,641, a breakout should aim for next hurdles from the 100 and 200-day ma, currently at 1,657 and 1,662. Key retracement support stays at 1,616, the 50%FR matching the recent correction low, with next crucial support from the January low of 1,600.

BUY Axiata & TM for Rebound

Axiata should recover on positive technical momentum towards the 23.6%FR (RM4.76), with next significant upside hurdle seen from the 50%FR (RM5.15). Supports from RM4.40 and RM4.11 (29/11/16 low) cushions downside risk. Similarly, TM should rebound towards the 23.6%FR (RM6.34) as technical momentum recovers after recent base building, with next resistance at the 38.2%FR (RM6.62) and crucial support from the 16/12/16 low (RM5.89).

Asia Markets Mixed as Toshiba Slump on Credit Downgrades

Asian markets struggled on Thursday and closed mixed, with the Japanese benchmark down more than 1 percent after Toshiba tumbled on credit downgrades. Japan's Nikkei 225 closed down 1.32 percent or 256.6 points at 19,145.14, weighed by pressure from a stronger yen and Toshiba's plunging shares. Shares of Toshiba were down 16.98 percent at 258.7 yen each after both Moody's and S&P Global Ratings downgraded Toshiba credit ratings and put the electronics conglomerate on ratings watch with negative implications. The downgrades come after the Japanese firm announced Tuesday it might have to recognize several billion dollars in write-downs related to its U.S.-based nuclear plant construction company acquisition. Down Under, the ASX 200 closed up 0.25 percent or 14 points at 5,699.07, supported by a 3.25 percent gain in its all ordinaries gold sub-index. South Korea's Kospi ended up 0.1 percent, or 2 points at 2,026.46. South Korea's finance ministry also revised its 2017 gross domestic product forecast for 2017, down to 2.6 percent from 3.0 percent earlier. Seoul also reported that industrial output jumped 3.4 percent in November from the previous month, its strongest monthly gain in almost seven years. The Shanghai composite closed down 0.18 percent or 5.7 points at 3,096.56 and the Shenzhen composite ended down 0.31 percent or 6.1 points at 1,966.24.

Wall Street Lower in Light Year-End Trade

U.S. stocks closed lower on Thursday in light year-end trading as traders began to look ahead to 2017. The U.S. announced sanctions against Russian individuals and organizations it believes interfered with the 2016 U.S. election. However, traders said it was not likely to affect stocks. On the data front, jobless claims declined by 10,000 to 265,000, according to Thursday morning's Labor Department report. This marks the 95th straight week that claims were below 300,000, a threshold associated with a healthy labor market. Jobless claims were expected to drop to 264,000 for the week ending Dec. 24, according to economists polled by Reuters. Meanwhile, the country's trade deficit in goods grew last month, according to a report released by the Commerce Department. The Dow Jones Industrial Average fell 13.9 points, or 0.1 percent to 19,819.78, the S&P500 eased 0.66 points to 2,249.26 while the Nasdaq Composite slipped 6.46 points or 0.12 percent to 5,432.08.

Corporate

Kim Loong Resources Bhd’s net profit for 3QFY17rose 3.3% to RM25.1mn, from RM24.3mn a year earlier, helped by lower operating expenses and higher profit from its plantation operations. Revenue rose 18.6% to RM248.1mn, from RM209.1mn, driven by higher revenue from both the plantation and palm oil milling operations. (Bursa Malaysia/ The Edge)

Apollo Food Holdings Bhd's net profit fell 55% to RM4.3mn in 2QFY17 from RM9.6mn a year ago, on weaker sales and higher raw material costs. Revenue fell 11% to RM48.1mn from RM53.8mn a year ago, as it recorded lower sales in both its local and overseas markets. (Bursa Malaysia/ The Edge)

SMTrack Bhd’s external auditor, KC Chia & Noor, has expressed a qualified opinion on the company’s annual audited financial statements for FY16. The auditor highlighted 3 issues that remained unresolved during the financial year in question, namely, the carrying value of certain assets, accounts’ opening balances and a gain on disposal of a subsidiary company. (Bursa Malaysia/ The Star)

The Tang family’s mandatory takeover offer to buy The Store Corp Bhd shares at RM3.70 each is not fair but it is reasonable, said Mercury Securities Sdn Bhd, the independent adviser appointed by the board to guide the shareholders. (Bursa Malaysia/ The Star)

Country Heights Holdings Bhd's unit Country Heights Sdn Bhd, which was ordered by the Shah Alam High Court to pay the Government tax arrears amounting to RM22.5mn, is appealing to the Finance Minister against the decision. (Bursa Malaysia/ The Star)

Berjaya Corp Bhd reported a 44% YoY rise in net profit in its 2QFY17, largely due to improved contribution from its property investment and development business segment. Net profit came in at RM176.5mn for 2QFY17. The better performance was largely due to sale of residences at its recently-opened Four Seasons Hotel Kyoto in Japan, besides higher profit recognition from a project in China, which is nearing completion. (Bursa Malaysia/ The Edge)

APFT Bhd posted a net loss of RM3.3mn in 1QFY17 whereas revenue stood at RM15.2mn. A total of RM3.5 million in loss before taxation was made in 1QFY17, mainly due to a decrease in revenue. There is no comparative financial information for the quarter as the company changed its financial year end from March 31 to July 31. (Bursa Malaysia/ The Edge)

Quality Concrete Holdings Bhd hopes to achieve better results in the coming quarters, after sinking deeper into the red for 3QFY17. The group reported an 88% increase in net loss to RM3.9mn for the quarter, from RM2.1mn in 3QFY16. The bigger loss was due mainly to a contract sum deduction for its completed water infrastructure project. (Bursa Malaysia/ The Edge)

Crescendo Corp Bhd saw its net profit for 3QFY17 surge 373.2% to RM8.0mn, from RM1.7mn a year earlier, mainly due to higher properties sales. Revenue increased 98.3% to RM72.4mn, from RM36.5mn. (Bursa Malaysia/ The Edge)

Bina Darulaman Bhd (BDB) is acquiring 3 plots of land in Sungai Petani, measuring a total of 13.29 acres, from the Kedah State Development Corporation for RM4.6mn. The acquisition will provide BDB Land with an opportunity to optimise its expertise as a property developer and generate profit from development of the land. (Bursa Malaysia/ The Edge)

Economy

Asia : No More 9-month KLIBOR Referral by January

The nine-month Kuala Lumpur Interbank Offered Rate (KLIBOR) should not be used as a reference by market participants from Jan 1, 2017 for new contractual agreements, says Bank Negara Malaysia (BNM). The central bank this was necessary as it is phasing out of the nine-month KLIBOR rate effective Jan 1, 2018. “This measure is decided after industry's feedback and taking into consideration the limited market demand, relevancy and sufficiency of transactional data to support the nine-month KLIBOR rate setting process,” it said. To recap, the KLIBOR was introduced in June 1987 as an official indicator of the conditions in the interbank money market. The rates that the KLIBOR contributors submit for KLIBOR setting indicate the rates that that they are willing to lend ringgit funds for the relevant tenors to interbank players and are mainly used as reference for other products such as the floating leg of interest rate swaps, options, futures and structured products. Recently, BNM issued enhanced standards on the KLIBOR Rate Setting Policy Document which at incorporated steps to further strengthen the integrity of the KLIBOR reference rate. BNM said on Thursday These measures are being introduced following a review of the KLIBOR rate fixing process and cover broadly, in the areas of governance, oversight, accountability and transparency. These measures will align the Policy Document with international best practices under the Principles of Financial Benchmarks issued by the International Organization of Securities Commission (IOSCO Principles). BNM said it was working with the financial industry to ensure the smooth implementation of the KLIBOR rate setting framework. Further guidance, where appropriate, will be provided to market participants during this transition phase from the discontinued nine-month KLIBOR tenure to alternative mechanisms, the central bank said. (The Star Online)

Singapore PPI Falls At Slower Rate in November

Singapore's producer prices declined further in November, but at a slower pace, figures from the Department of Statistics showed. The manufactured products price index fell 2.3% year-over-year in November, following a 2.7% drop in October. The measure has been falling since May 2014. The oil and non-oil indices dipped 1.3% and 2.4%, respectively in November from a year ago. The domestic supply price index rose 0.4% annually and edged up 0.1% from the previous month. Month-on-month, producer prices increased at a steady rate of 0.3% in November. Data also showed that import prices climbed 0.9% yearly in November, reversing a 1.1% decline in the prior month. At the same time, export price index continued its declining trend in November. However, it slipped at a slower pace of 1.2%, following a 2.7% fall seen in October. (RTT News)

Bank of Korea to Keep Policy Easy in 2017

South Korea's central bank said it plans to keep its monetary policy accommodative next year to support economic recovery and to push inflation to reach the bank's target of 2%. In its annual plans for policy direction, the Bank of Korea (BoK) said it sees the output gap persisting through next year as the economy will lack the momentum to reach full capacity. The output gap measures an economy's actual output versus its potential output. The BoK said there was a limit to how far monetary policy alone could go towards achieving financial stability, arguing that macro-prudential policies should be used in harmony with monetary measures to curb imbalances. Growth in consumption and construction investment was seen slowing next year, while capital investment and exports were likely to rebound, the central bank said. The economy, it added, faced downside risks from political uncertainty, referring in particular to ongoing investigations into an influence-peddling scandal involving President Park Geun-hye, who faces losing her position. Meanwhile, household borrowing will likely keep rising at a faster pace compared to the average speed of previous years, although it will not surge sharply, it added. Inflation would continue heading towards the central bank's target, while fluctuations in global oil prices and foreign exchange rates made for uncertainty over the likely path of prices. On exchange rate volatility, the BoK said it would seek measures to ease temporary shocks in financial markets if they occurred unexpectedly. It did not offer further details on the measures. (The Star Online)

U. S. : U.S. Jobless Claims Fell Last Week to 265,000

The U.S. job market ended the year on solid footing as an important indicator of layoffs continued to hover near historically low levels. The Labor Department reported that applications for new unemployment benefits decreased by 10,000 to a seasonally adjusted 265,000 in the week ended Dec. 24, matching economists’ expectations and partially reversing a jump in the prior week. Even accounting for short-term volatility, which can be especially pronounced around holidays, the trend appears healthy. Initial jobless claims have now hovered below 300,000 for 95 consecutive weeks, the longest such streak since 1970—when the U.S. workforce and population were far smaller than they are today. Economic conditions vary widely, though, from region to region. In a separate report, the Labor Department said unemployment rates across U.S. metro areas ranged in November from a low of 1.7% in Ames, Iowa, to a high of 20.3% in El Centro, Calif. Among large metro areas, jobless rates ranged from 2.4% in Boston and Salt Lake City to 5.5% in Riverside-San Bernardino-Ontario, Calif. (The Wall Street Journal)

U. K. : U.K. House Prices rise in December, Slowdown Likely in 2017 – Nationwide

British house prices rose faster-than-expected in December, but the pace of growth is likely to slow in 2017 amid uncertainty about economic developments, mortgage lender Nationwide said. Annual gains stood at 4.5% in December, up from 4.4% in November. Economists polled this month had expected to see growth of 3.8%. Britain's property market slowed immediately after the vote in June to leave the European Union, but since then the economy has fared better than many economists expected and house prices have continued to rise. Nationwide reiterated a forecast that house prices are likely to grow by around 2% in 2017, although the figure would depend on how the economy fares. Nationwide said low interest rates and a shortage of homes are expected to underpin support for prices. (Reuters)

Europe : Eurozone Money Supply Growth Accelerates Unexpectedly in November

Eurozone money supply annual growth accelerated sharply in November, defying expectations for a steady pace, figures from the European Central Bank showed. The broad money measure, M3, rose 4.8% year-on-year following 4.4% increases in October. Economists had expected the pace of growth to remain unchanged. Among the components of M3, the narrower aggregate that includes currency in circulation and overnight deposits, grew 8.7% in November after an 8.0% increase in October. Deposits placed by households increased 5.3% annually in November following 5.1% growth in October. The annual growth rate of deposits placed by non-financial corporations increased to 7.1% from 5.5% in October. Total credit to euro area residents grew 4.4% annually in November, after 4.2% increase in the previous month. Lending to the private sector grew 2.4% versus 2.3% in October. After adjusting for loan sales, securitization and notional cash pooling, lending to the private sector rose 2.2% annually in November, unchanged from the previous month. The annual growth rate of adjusted loans to households climbed to 1.9% in November, the best figure since 2011, from 1.8% in October. Lending to businesses grew 2.2% in November, the strongest figure since mid-2009, after 2.1% gain in October. (RTT News)

Source: TA Research - 30 Dec 2016