TA Sector Research

Daily Market Commentary - 9 Oct 2023

Publish date: Mon, 09 Oct 2023, 10:22 AM

Review & Outlook

With the FBM KLCI struggling to recover from levels not seen in more than two months, technical indicators increased their bearish positioning, implying further correction potential, pending firmer signs of buying support which is key to reverse the current bearish momentum. Meantime, the much stronger-than-expected US jobs report released last Friday triggered a delayed rally on Wall Street on hopes the strong economy could sustain on moderating inflation, and reduced fears of high interest rates persisting. On the other hand, prevailing concerns over potential introduction of capital gains or other forms of taxes in the Budget 2024 proposals this Friday should check gains.

On the index, immediate support is fixed at 1,400, with 1,390 and the end June low of 1,370 acting as stronger supports. Immediate overhead resistance is retained at 1,450, with 1,465/1,470, and the 1,490/1,500 area acting as tougher upside hurdles.

As for stock picks, key banking and telco blue chips like AMBank, CIMB, Maybank, Public Bank, Axiata and CelcomDigi will be attractive to bargain on further weakness for recovery upside going forward, while construction stocks such as Gadang and Sunway Construction should also attract buyers looking for infrastructure plays.

News Bites

  • Bank Negara Malaysia's international reserves slipped to US$110.1bn (RM519.23bn) as at Sept 29, from US$111.5bn on Sept 15.
  • RAM Rating Services Bhd has removed the issue ratings of Kuala Lumpur Kepong Bhd and Batu Kawan Bhd's sukuk programmes from its negative rating watch, reinstating the outlook on the ratings to stable and concurrently reaffirming their long-term issue ratings at AA1.
  • Top Glove Corp Bhd, which posted its first-ever annual loss of RM926.6mn in FY2023, is expecting to turn around its business in the next 6 to 12 months.
  • UMW Holdings Bhd is disposing of a 26% stake in an industrial equipment arm to Toyota Industries Corp for RM260mn, as part of an agreement to collaborate in the IE business in Malaysia, Singapore, Vietnam and China.
  • Tropicana Corp Bhd has redeemed the second tranche of its sukuk wakalah programme worth RM179mn due on Friday.
  • Dutch Lady Milk Industries Bhd plans to double production next year after shifting to its new RM540mn facility in Bandar Enstek, deploying eight production lanes.
  • A group of KNM Group Bhd shareholders planning to take over the company's leadership, led by German billionaire and substantial shareholder Andreas Heeschen, has dismissed speculation that they would sell KNM's crown jewel, the Borsig Group.
  • Kinergy Advancement Bhd has inked a MoU with Alliance Bank Malaysia Bhd to offer its expertise and resources in sustainable energy technologies and manage carbon emissions.
  • Nova MSC Bhd plans to undertake a private placement exercise of 10% of its share base to raise up to RM23.8mn for its working capital as well as for its web-based platform Vesalius.
  • Opensys (M) Bhd's subsidiary OpenSys Technologies Sdn Bhd has signed a services agreement with Asia Carbonx Change Plt to allow for the registration and verification of small-scale renewable energy solar devices, specifically those below 1MW, on the IREC registry.
  • Waja Konsortium Bhd has proposed to undertake a private placement of up to 30% of its issued shares to raise up to RM31.7mn, mainly to fund its construction business and working capital requirement.
  • Minox International Group Bhd has garnered a robust response for its initial public offering, which has been oversubscribed by 143.8 times ahead of its listing on the ACE Market of Bursa Malaysia Securities Bhd.
  • Malaysia Airports Holdings Bhd announced that its managing director and group chief executive officer Datuk Seri Iskandar Mizal Mahmood will be stepping down from his role upon expiration of his two-year contract on Oct 24.
  • Dagang Nexchange Bhd has appointed Muhammad Saifullah Mohd Isa, the son of its largest shareholder Mohd Isa Ismail, as its executive director, effective Friday.
  • The US nonfarm payrolls increased by 336,000 jobs last month, higher than forecast 170,000.

Source: TA Research - 9 Oct 2023

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