Review & Outlook

Stocks extended profit-taking correction Thursday, led by utility, construction and technology counters, while persistent limit-down losses on lower liners hurt retail sentiment. The FBM KLCI fell 12.03 points to close at 1,479.18, off an early high of 1,492.53 and low of 1,478.03, as losers trashed gainers 885 to 218 on higher turnover of 6.09bn shares worth RM3.61bn.

Retail sentiment should remain weak given worries over persisting forced selling on margined positions in lower liners, with global growth and geopolitical concerns also dampening market tone. Key index supports to watch for on correction extension will be 1,465 and 1,455, the respective 50-day and 100-day moving averages, with 1,440/1,430 as stronger supports. Immediate overhead resistance is at 1,500/1,510, which restricted upside in Jan 2023, with next key hurdles at 1,520 and 1,550.

Hibiscus should attract buyers at current levels, with key chart support from the 200-day ma (RM2.45) restricting downside, while a convincing break above the 50%FR (RM2.73) should aim for the 61.8%FR (RM2.93) and 76.4%FR (RM3.18) ahead. Wasco will need breakout confirmation above the 19/9/23 high (RM1.09) to fuel upside momentum towards the 123.6%FP (RM1.22) and 138.2%FP (RM1.30) going forward, while the 200-day ma (94sen) limits downsie risk.

News Bites

• Think tank Asean+3 Macroeconomic Research Office has revised downwards Malaysia's 2024 growth forecast in its January quarterly update to 5.0% from 5.2% previously, while maintaining the country's 2023 full-year growth forecast of 4.2%.

• A unit of Eco World Development Group Bhd, Eco Botanic 3 Sdn Bhd is acquiring land in Pulai, Johor from River Retreat Sdn Bhd for RM450.1mn, and will subsequently develop the land for affordable housing.

• Sime Darby Property Bhd's Great Deals sales campaign achieved sales bookings of 1,107 units worth RM1.1bn.

• Tanco Holdings Bhd is not aware of any corporate development, rumour or report that may have triggered the sharp fall.

• Widad Group Bhd revealed that the group is discussing several business proposals, in its response to the unusual market activity query issued by Bursa Securities after its share price plunged on yesterday.

• Samaiden Group Bhd has signed a MoU with Universiti Tunku Abdul Rahman, marking a critical step towards integrating academic prowess with industry expertise, particularly in the field of renewable energy.

• PA Resources Bhd has bagged an extension of supply agreement worth RM1.1bn (US$231.9mn) from First Solar, Inc, First Solar Malaysia Sdn Bhd and First Solar Vietnam Manufacturing Co Ltd to supply goods for production of photovoltaic modules.

• Mercury Securities Group Bhd , which received an unusual market activity query from Bursa Securities after its shares hit a limit-down on Wednesday, said it is in talks to purchase a business that fits the group's current operations.

• FM Global Logistics Holdings Bhd is buying two pieces of land totalling 5.7 acres in the Setia Alaman Industrial Park, Klang, from property developer Petaling Garden Sdn Bhd for RM37.9mn, cash, or RM153 per sq ft.

• Gagasan Nadi Cergas Bhd has accepted a letter of award from Employees Provident Fund-owned Kwasa land Sdn Bhd to be the development partner for an affordable housing project with an estimated GDVof RM1bn and an estimated construction cost of RM750mn. in Kwasa Damansara Township in Petaling, Selangor.

• Artroniq Bhd said it is diligently investigating the factors contributing to the recent stock price volatility and will keep stakeholders duly informed.

• Sentoria Group Bhd plans to raise up to RM150mn, more than three times its market capitalisation of RM40mn, from a redeemable convertible bonds issue to repay loans and finance property developments.

• China's deflation was driven by falling prices in its manufacturing sector last year, fresh data showed on Thursday, adding to the risk of trade tensions with the US and Europe amid a major ramp-up in Chinese industrial capacity.

• European Central Bank policymakers stressed on the need to remain vigilant against inflation risks though they were increasingly more confident that the rate would be brought to the 2% target by 2025, minutes of the December 13-14 policy session showed Wednesday.

• Initial claims for state unemployment benefits in the US dropped 16,000 to a seasonally adjusted 187,000 for the week ended Jan 13, the lowest level since September 2022.

Source: TA Research - 19 Jan 2024