Review & Outlook

Given the multiple bearish divergence signals seen on the 14-day and 14- week RSI, and daily MACD trend indicators on the FBM KLCI, it is likely the local market will be set for a profit-taking consolidation phase in the immediate term. This consolidation should last a few weeks going into early August, before investors return to resume bargain hunting at cheaper prices. Looking ahead, buying momentum and positive market breadth will need to stage strong comeback to support sustained recovery upside to fresh three-year highs.

For the index, immediate supports are revised lower to 1,606 and 1,583, the respective 50-day and 100-day moving average levels which should be able to cushion downside during the current correction phase, while immediate resistance will be at 1,628, with the recent high of 1,638, and subsequently 1,640 and 1,660 acting as tougher upside hurdles.

As for stock picks this week, selective banking, telco and lower liner construction counters should again encourage investors to bargain hunt following recent sharp corrections as they look for rebound upside ahead.

News Bites

• Prime Minister Datuk Seri Anwar Ibrahim said on Sunday Malaysia has sent an application to Russia to join the BRICS intergovernmental organisation.

• AirAsia X Bhd will be acquiring Capital A Bhd's aviation business directly, and not via a new company under an internal reorganisation proposed previously, to expedite the takeover.

• Hibiscus Petroleum Bhd has been awarded a 65% participating interest and operatorship in a production sharing contract by Petroliam Nasional Bhd.

• Petronas awarded Ping Petroleum Sdn Bhd, a subsidiary of Dagang NeXchange and Duta Marine Sdn Bhd a small field asset cluster PSC for the Bubu, Bunga Tasbih and Enau fields.

• ViTrox Corp Bhd's co-founders are partnering with private equity firm Southern Capital Group to create a venture capital fund to support local tech startups and nurture a robust tech ecosystem in Malaysia.

• Ekovest Bhd has agreed to a further extension of time to discuss a merger between its wholly owned subsidiary Ekovest Construction Sdn Bhd and Knusford Bhd.

• Datasonic Group Bhd has secured a RM30mn contract to supply smart cards to Perum Percetakan Negara Republik Indonesia, a unit of the Indonesian Ministry of State-Owned Enterprises.

• Kumpulan Kitacon Bhd has secured a RM54.5mn contract to undertake the construction of 186 terrace houses in Rawang, Selangor.

• PN17 company Alam Maritim Resources Bhd has announced its regularisation plan. Upon completion of the proposed debt restructuring, Alam Maritim is expected to recognise a one-off net gain of RM50.6mn from the waiver of debts owed to the scheme creditors.

• Malaysian Genomics Resource Centre Bhd has proposed to undertake a private placement of up to 10% of its issued share, or 13.7mn new shares that is expected to raise up to RM5.0mn.

• 99 Speed Mart Retail Holdings Bhd has signed a retail underwriting agreement with CIMB Investment Bank Bhd, Affin Hwang Investment Bank Bhd, and RHB Investment Bank Bhd, in conjunction with its upcoming IPO.

• Amanah Saham Bumiputera, a unit trust fund of Permodalan Nasional Bhd, has ceased to be a substantial shareholder in Telekom Malaysia Bhd following a disposal on 24 July.

• Westports Holdings Bhd's net profit for the 2QFY24 rose 4.6% YoY to RM203.7mn from a year ago, due to lower operating expenses.

• China's industrial profits grew at a faster 3.6% YoY in June, even as businesses were grappling with a downshift in consumers' sentiment amid a shaky economic recovery.

• China disclosed it is earmarking CNY300bn (US$41bn or RM193.02bn) for an initiative to give a makeover to the country's stock of industrial and household equipment, as part of this year's main stimulus programme to lift consumer spending.

• U.S. prices increased moderately in June with the personal consumption expenditures price index nudging up 0.1% in June, underscoring an improving inflation environment that could position the Fed to begin cutting interest rates in September.

• Britain's government declared the country was "broke and broken" ahead of an assessment of the public finances on Monday which the newly-elected Labour Party will use to blame their predecessors for a GBP20bn (US$26bn or RM121bn) shortfall.

Source: TA Research - 29 Jul 2024