TA Sector Research

Daily Market Commentary - 28 August 2023

Publish date: Mon, 28 Aug 2023, 11:50 AM

Review & Outlook

Conflicting technical signals on momentum and trend indicators for the FBM KLCI following last week's range bound trade imply further consolidation ahead, as the domestic market awaits more definite and stronger leads to lift stocks off the present consolidation phase. Meantime, given uncertainties over China's struggling economy which will require more concerted stimulus by the government to reverse the slide, while on the contrary, the more hawkish message from the Federal Reserve chief that the stubbornly strong US economy may require further interest rate hikes or be held at higher levels for an extended period to draw down inflation to a more manageable level, the local market should continue to stay range bound till the present cloudy external economic landscape clears.

On the index, immediate chart supports cushioning downside remains the recent low of 1,433, then 1420/1,400. Looking forward, a convincing breakout above the 1,464 high and 1,470 backed by stronger buying momentum would be key to accelerate rise towards the 1,490/1,500 resistance level, with next upside hurdles seen at 1,515, the 200-week moving average, and 1,552, which is the 50%FR of the 1,896 high (April 2018) to the 1,207 low (March 2020).

As for stock picks, lower liner technology and construction related counters like Aemulus, SKP Resources, VSI, Hiap Teck, MRCB, UEM Sunrise and WCT Holdings should attract investors to bargain hunt for recovery going forward.

News Bites

  • Malaysia's consumer price index cooled to 2% YoY in July 2023, the lowest for the year. • Malaysia's leading index declined 2.1% YoY in June 2023, indicating a moderate economic performance in the fourth quarter of 2023.
  • Bank Indonesia, Bank Negara Malaysia and the Bank of Thailand have signed three bilateral memoranda of understanding on a framework for cooperation to promote bilateral transactions in local currencies between the countries.
  • IHH Healthcare Bhd has upped its stake in Ravindranath GE Medical Associates Private Ltd to 98.2% from 73.6%, following shares acquisition for a cash consideration of INR7400.0mn (RM415.0mn).
  • Tenaga Nasional Bhd and its counterpart in Indonesia, PT PLN, are to jointly study the feasibility of connecting the power grids of peninsular Malaysia and Sumatra, Indonesia via the Strait of Malacca.
  • Malaysia Airports Holdings Bhd registered more than 11.0mn total passenger movements for July 2023.
  • CTOS Digital Bhd has announced the acquisition of 2 fast-growing credit scoring companies in the Philippines and Indonesia for US$6.3mn (RM29.4mn).
  • Ecoscience International Bhd has accepted a letter of award, valued at RM24.0mn, issued by PT Wijaya Inti Nusantara Sawit for the design, supply and fabricate works for the construction of the palm oil refinery complex.
  • Sersol Bhd has announced the removal of its executive chairman Datuk Lim Tiong Siang and two of its independent and non-executive directors, Shazreen Mohd Hatta and Sia Meng Chan, with immediate effect.
  • Tenaga Nasional Bhd's net profit slumped 62.4% YoY to RM327.9mn for the 2QFY23 due to lower operating profit.
  • Lower contribution from the Armada Kraken floating production storage and offloading pushed Bumi Armada Bhd's net profit down 36.2% YoY to RM118.8mn in 2QFY23.
  • Padini Holdings Bhd's FY23 net profit jumped 44.5% YoY to RM222.7mn but it expects retail business to remain challenging as inflation takes a toll on consumers' spending power.
  • Sarawak Oil Palms Bhd's net profit fell 68.8% YoY to RM48.1mn in 2QFY23 due to lower prices of palm products coupled with higher production costs.
  • Berjaya Land Bhd posted a net profit of RM51.9mn in the 4QFY23 compared with a net loss of RM133.4mn a year prior.
  • Paramount Corporation Bhd's 2QFY23 net profit increased 164.8% YoY to RM24.1mn while revenue rose 19.4% YoY to RM241.6m.
  • Kerjaya Prospek Property Bhd reported that its net profit for 1QFY24 remained flat at RM21.8mn, representing a marginal 0.3% YoY increase.
  • China halved the stamp duty on stock trading effective today in the latest attempt to boost the struggling market.
  • Profits at China's industrial firms fell 6.7% YoY in July, extending this year's slump to a seventh month.
  • US Federal Reserve (chair Jerome Powell signalled interest rates will stay high, and could rise even further should the economy and inflation fail to cool.

Source: TA Research - 28 Aug 2023

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