Review & Outlook

Given the resilient market seen last week as stocks underwent shallow profit-taking corrections to neutralize their overbought technical momentum, the near-term direction for our local stock market should be biased to the upside. Moreover, most technical indicators remained positive, with buying momentum staying robust and likely to support further uptrend ahead. Nonetheless, confirmation by way of a better showing by the present unity government in the six state elections over the weekend will be key to support further uptrend ahead, while a weak performance will likely see stocks extending correction for the immediate term.

On the index, a convincing breakout above the 1,464 recent high and 1,470 backed by strong buying momentum would be key to accelerate rise towards the 1,490/1,500 resistance level, with next upside hurdles seen at 1,517, the 200-week moving average level, and 1,552, which is the 50%FR of the 1,896 high (April 2018) to the 1,207 low (March 2020). On the flipside, key chart supports to cushion downside are at the recent low of 1,433, then 1420/1,400, and the 23.6%FR at 1,370, matching the June low.

As for stock picks, key construction, gaming, banking and utility blue chips such as Gamuda, Genting Berhad, Genting Malaysia, Maybank, Public Bank, RHB Bank, Sime Darby and Tenaga should continue to attract investors looking to position for longer-term recovery ahead.

News Bites

• The outcome of Malaysia's six state elections showed both the unity government and opposition alliance retained control of their respective states.

• Malayan Banking Bhd and Credit Guarantee Corporation Bhd have launched the first-of-its-kind direct application programming interface platform for SME Digital Financing.

• Permodalan Nasional Bhd is believed to be making a major decision on its 65.6% stake in UMW Holdings Bhd very soon, according to the sources privy to the matter.

• PPB Group Bhd is disposing of its 51.0%-owned indirect subsidiary in Indonesia's PT Pundi Kencana for 290.7bn rupiah (RM87.5mn) cash in a related-party transaction.

• Retail chain 99 Speedmart founder Lee Thiam Wah has ceased to be a substantial shareholder of Alliance Bank Malaysia Bhd.

• Top Glove Corporation Bhd has been dropped as a constituent for the MSCI Global Standard Indexes, which will take place as of the close of Aug 31, 2023.

• Solarvest Holdings Bhd has founded a new wholly-owned subsidiary, Solarvest (Taiwan) Corp Ltd, in Taipei, Taiwan with the aim to strengthen its market presence and explore clean energy project opportunities in Taiwan.

• Cnergenz Bhd has proposed to transfer the listing of and quotation for its entire issued share capital from the ACE Market to the Main Market of Bursa Malaysia Securities Bhd.

• WTK Holdings Bhd had entered into a conditional share sale agreement with Ocarina Development Sdn Bhd to acquire 70.0% stake in Durafarm Sdn Bhd for RM132.2mn cash.

• A consortium comprising Salcon Bhd and Kinergy Advancement Berhad has been selected as one of the Corporate Green Power Programme solar power producer.

• Singapore-based Deepetro Offshore Brokers Pte Ltd has ceased to be a substantial shareholder of Handal Energy Bhd a week after attaining the status.

• Pertama Digital Bhd said it is not proceeding with the placement of its shares to Australia-based Macquarie Bank Ltd to raise gross proceeds of up to RM87.8mn.

• Media Chinese International Ltd has issued a profit warning for its upcoming quarterly results, saying the losses attributable to owners may widen to between USD2.0mn and USD3.0mn for 1QFY24, from USD300k a year earlier.

• Pharmaniaga Bhd's net profit more than doubled to RM2.0mn for 2QFY23, compared with RM0.7mn a year earlier.

• Singapore's gross domestic product expanded a seasonally adjusted 0.1% QoQ in April to June, slower than 0.3% growth seen in the government's advance estimate.

• The US producer price index for final demand, as well as the core index which excludes food and energy, both rose by 0.3% in July.

Source: TA Research - 14 Aug 2023