Review & Outlook

The rebound on the FBM KLCI late Friday last week failed to reverse longer-term technical indicators from their declining trends, which will need stronger and more sustained buying momentum to encourage firmer investor participation. The missing link will be more concrete positive domestic catalysts, potentially from policy or contract announcements which is crucial to sustain trading interest and further aid upside momentum going forward. On the external front, concerns over the hawkish stance professed by the US Federal Reserve and a slew of other major global central bankers, implying interest rates could stay higher for a prolonged period amid the sticky inflation outlook, should limit near-term upside potential.

On the index, immediate support cushioning downside remains at 1,440, followed by 1,433, with subsequently 1420/1,400 acting as stronger supports. Immediate overhead resistance stays at 1,465, then 1,470, with the 1,490/1,500 area as next resistance, and stronger upside hurdles seen at 1,513, 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, defensive blue-chip construction, gaming and utility counters such as Gamuda, Genting Berhad, Genting Malaysia, Sime Darby, Tenaga and TM should attract investors looking to accumulate for longerterm upside potential.

News Bites

• Malaysia's consumer price index grew 2.0% YoY in August, the same growth rate recorded in July, as overall prices for food, restaurants and hotels recorded a slower increase.

• The cut-off date for the proposed disposal of a 33% stake in Boustead Plantations Bhd by the Armed Forces Fund Board has been extended for the second time to 6 October 2023.

• RHB Bank Bhd is asking financial advisers for proposals for its partnership to sell insurance in its branches, as its deal with an arm of Tokio Marine Holdings Inc is set to expire at the end of next year, according to people with knowledge of the matter.

• Petronas CCS Ventures Sdn Bhd has signed a term sheet with Mitsui OSK Lines Ltd and MISC Bhd for the potential incorporation of a jointventure entity to invest in developing and monetising liquefied carbon dioxide carriers.

• Chin Hin Group Bhd said it will be making a mandatory general offer for the remaining shares in Ajiya Bhd at RM1.53 per share, but intends to maintain Ajiya's listing status.

• ITMAX System Bhd has bagged a RM111.2mn contract from the Iskandar Puteri City Council to provide video surveillance and smart traffic light system services in Iskandar Puteri, Johor for a period of 15 years on a service subscription basis.

• CTOS Digital Bhd's wholly-owned subsidiaries, CTOS Data Systems Sdn Bhd, CTOS Basis Sdn Bhd and CTOS IDS Sdn Bhd, have entered into recurrent related party transactions for an aggregated value of RM4.0mn.

• LFE Corp Bhd has entered into a conditional share sale agreement with Patrick Heng Jin Wei to buy the remaining 40% equity of LFE Development Sdn Bhd for RM3.5mn cash.

• Symphony Life Bhd has proposed a renounceable rights issue of warrants for the basis of one warrant for every two existing shares, to raise up to RM35.8mn.

• Sedania Innovator Bhd's major shareholder Sedania Corp Sdn Bhd has been ordered by the High Court to compensate RM14.5mn to two individuals claiming to own a 49% stake in Sedania's consumer healthcare products business.

• Tanco Holdings Bhd's group managing director Datuk Seri Andrew Tan Jun Suan has raised his indirect shareholding in the group to 39.6% stake after acquiring 5mn shares on 22 September 2023 in the open market at 56 sen per share.

• United Malacca Bhd saw its net profit for 1QFY24 fall 89.0% YoY to RM2.7mn from RM24.3mn a year earlier on lower contribution from its Malaysian operations due to lower average crude palm oil and palm kernel prices.

• Japan's central bank left its massive monetary policy stimulus unchanged on Friday and policymakers remained dovish even as inflation continued to remain above the target.

• The US House of Representatives' Rules Committee on Saturday voted, 9-2, to tee up four appropriations bills for debate on the full House floor, the latest move in Republicans' last-ditch bid to prevent government shutdowns after a Sept 30 deadline.

Source: TA Research - 25 Sept 2023