TA Sector Research

Daily Market Commentary - 20 May 2024

Publish date: Mon, 20 May 2024, 11:13 AM

Review & Outlook

Following FBM KLCI's upward journey to close at a fresh three-year high last Friday, short and medium-term momentum indicators are increasingly overbought, signalling profit-taking correction is overdue. However, given the strong uptrend momentum backed by robust buying support from foreign and local institutional players, more upside is in the cards going forward. Moreover, the stronger-than-expected 1Q GDP of 4.2 percent should spread optimism on the recovery pace for our domestic economy for the rest of the year and encourage more investor commitments into the local stock market.

On the index, a break above 1,620 will accelerate gain towards next hurdle at 1,640, with 1,660 and then 1,680 as tougher upside hurdles ahead. Immediate uptrend support is now at 1,600, with 1,580, 1,566 and 1,538, the respective rising 30-day, 50-day and 100-day moving averages, acting as strong supports.

As for stock picks this week, key telco, oil & gas, rubber glove and technology counters should outperform on rotational basis, with market players attracted by the current extremely robust trading momentum.

News Bites

  • Malaysia's 1Q24 GDP grew 4.2% YoY, higher than the median estimate of 3.9% growth in Bloomberg's survey of economists and advanced estimate by DoSM.
  • State-owned private equity firm Ekuiti Nasional Bhd is understood to be talking to Hubline Bhd to explore the sale of Orkim Sdn Bhd in a deal potentially worth RM900.0mn, according to sources.
  • Tan Sri Mokhzani Mahathir has decided to step down as chairman of the board of Maxis Bhd effective June 30.
  • PPB Group Bhd is planning to invest RM327.0mn in its film exhibition and distribution segment, which houses Golden Screen Cinemas, over the next five years.
  • ITMax System Bhd has been awarded a RM105.3mn Variation Order from the Kuala Lumpur City Hall.
  • DC Healthcare Holdings Bhd plans to expand its business to Sabah and Sarawak by the end of this year.
  • Destini Bhd said a Dutch shipbuilding company has commenced arbitration proceedings against the group and its subsidiary, claiming up to EUR3.0mn (RM15.5mn) over alleged unpaid invoices.
  • Epicon Bhd has secured a RM50.0mn sub-contract from Axventure Sdn Bhd for structural reinforced concrete works for Tower 1 and Tower 2 under a high-rise residential development in Segambut, Kuala Lumpur.
  • Kawan Renergy Bhd's public portion shares under its initial public offering have been oversubscribed by 95.0 times. The group is slated for a listing on the ACE Market of Bursa Malaysia on May 29.
  • Sarawak Cable Bhd said that the Memorandum of Agreement between the group and Serendib Capital Ltd had been validly terminated.
  • Pappajack Bhd has proposed to transfer the listing and quotation for its entire issued share capital from the ACE Market to the Main Market of Bursa Malaysia Securities Bhd.
  • Ho Hup Construction Company Bhd said its 52%-owned unit Golden Wave Sdn Bhd has applied with the High Court to be placed under judicial management.
  • NationGate Holdings Bhd has secured approval from the Securities Commission Malaysia for its transfer to the Main Market of Bursa Malaysia.
  • BWYS Group Bhd has entered into an underwriting agreement with M&A Securities Sdn Bhd for its initial public offering on the ACE Market of Bursa Malaysia.
  • Maxis Bhd's net profit in 1QFY24 rose 10.3% YoY to RM353.0mn from RM320.0mn a year ago, due to higher service revenue and better cost control. Its quarterly revenue improved 3.0% YoY to RM2.6bn from RM2.5bn a year ago.
  • PIE Industrial Bhd's net profit for 1QFY24 dropped 31.2% YoY to RM9.7mn, from RM14.1mn a year earlier, due to lower demand caused by shortages of major integrated circuits.
  • Malayan Flour Mills Bhd's net profit in 1QFY24 jumped 263.0% YoY to RM37.9mn from RM10.4mn a year ago, thanks to higher margins in its flour and grain segment from lower wheat prices.
  • China's industrial output grew 6.7% YoY in April, accelerating from the 4.5% pace seen in March and above the 5.5% increase tipped in a Reuters poll of analysts.
  • The International Monetary Fund criticised the Biden administration's decision to aggressively raise tariffs on some Chinese goods, underscoring its warning that tensions between the world's top two economies risk hurting global trade and growth.

Source: TA Research - 20 May 2024

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