TA Sector Research

Daily Market Commentary - 11 August 2023

Publish date: Fri, 11 Aug 2023, 10:56 AM

Review & Outlook

Stocks drifted lower to consolidate sideways on Thursday, as investors fret over potential for China falling into a deflationary spiral following a sharp decline in inflation data. The FBM KLCI slipped 3.1 points to settle at 1,458.93, after moving within opening high of 1,460.70 and low of 1,453.37, as losers edged gainers 464 to 358 on slower turnover totaling 2.92bn shares worth RM1.83bn.

The local market should trade sideways with downward bias ahead of the weekend, as investors are likely to consolidate their positions and stay sidelined ahead of the keenly awaited outcome of the six state elections over the weekend. Immediate resistance for the index stays at last week's high of 1,464, with 1,470, and the 1,490/1,500 level acting as tougher upside hurdles. Immediate support cushioning downside will be last week's low of 1,433, with stronger supports seen at 1,420 and 1,400.

Gamuda need to overcome the upper Bollinger band (RM4.54) to fuel further upside momentum towards the 123.6%FP (RM4.72) and 138.2%FP (RM5.00) ahead, while the 100-day ma (RM4.19) and 200-day ma (RM3.91) provide strong uptrend supports. Tenaga will need convincing breakout above the 19/5/23 peak (RM9.82) to enhance upside potential and target the 123.6%FP (RM10.37) and 138.2%FP (RM10.71) going forward, with retracement support at the 76.4%FR (RM9.27) cushioning downside.

News Bites

  • Malaysia's unemployment rate declined 0.1 percentage point to 3.4% in June 2023 from 3.5% recorded in the previous month.
  • IHH Healthcare Bhd is acquiring the entire equity interest in Bedrock Healthcare Sdn Bhd for RM245.0mn.
  • Southern Cable Group Bhd has bagged a contract worth RM332.1mn from Tenaga Nasional Bhd.
  • Prolexus Bhd intends to raise up to RM102.6mn through a renounceable rights issue of irredeemable convertible unsecured loan stocks to trim its bank borrowings and to fund its working capital.
  • NCT Alliance Bhd has proposed a 10.0% private placement of its total issued shares to raise RM54.4mn to fund its property development of the Grand Ion Majestic and Ion Vivace projects.
  • Eco World Development Group Bhd has issued its second tranche of the rated sukuk wakalah amounting to RM550.0mn with a tenure of five years.
  • EA Holdings Bhd has urged its shareholders not to attend and vote at an extraordinary general meeting on Aug 22 called by its substantial shareholder Ng Cheng Shin.
  • Advancecon Holdings Bhd's 30.0%-owned associate has secured a contract worth RM45.5mn from Petros Power Sdn Bhd for the proposed construction and completion of earthworks of a power plant project in Miri, Sarawak.
  • IGB Bhd said that its Tank Stream Hotel in Sydney, Australia will be managed by EVT Hotels and Resorts. The Tank Stream Hotel is a 15- storey hotel building with 280 rooms.
  • Axteria Group Bhd has proposed a private placement of up to 10.0% of its total number of issued share capital to raise RM11.3mn.
  • MARC Ratings has affirmed its rating of AA- IS on Guan Chong Bhd's sukuk Wakalah programme of up to RM800.0mn with a stable outlook.
  • Berjaya Corporation Bhd's founder and advisor Tan Sri Dato' Seri Vincent Tan Chee Yioun and Berjaya Land Bhd have filed a defamation suit against Kedah caretaker Menteri Besar Datuk Seri Muhammad Sanusi Md Nor.
  • Top Builders Capital Bhd said that its external auditor, Kreston John & Gan, has resigned on a voluntary basis.
  • Rapid Synergy Bhd is disposing of two pieces of land to Dunnes Sdn Bhd for RM16.0mn cash, which will be utilised mostly for working capital and the redemption of a loan.
  • Pentamaster Corporation Bhd's net profit rose 23.2% YoY to RM23.7mn in 2QFY23 from RM19.2mn a year ago, on the back of higher revenue and better product mix.
  • MHC Plantations Bhd's net profit fell 73.8% YoY to RM4.3mn in 2QFY23 from RM16.3mn a year ago, due to lower average selling prices of oil palm products.
  • Sentral Real Estate Investment Trust's net property income for 2QFY23 grew 4.6% YoY to RM29.2mn from RM27.9mn a year earlier.
  • China has lifted pandemic-era restrictions on group tours for more countries, including key markets such as the US, Japan, South Korea and Australia.
  • The US consumer price index rose 3.2% YoY in July, slightly below expectations, while the core CPI ran at a 12-month rate of 4.7%.

Source: TA Research - 11 Aug 2023

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