Review & Outlook

Following last Friday's strong comeback from a steep profit-taking correction sparked by aggressive foreign fund buying in key utility, banking and consumer heavyweights, further upside bias for the local market is expected. Short-term technical momentum indicators on the FBM KLCI have turned around to support positive longer-term trend indicators, implying uptrend resumption which should strengthen with improving buying momentum and market sentiment. Moreover, with the US PCE price index, which is the Federal Reserve's closely watched inflation gauge, rising 0.2% on monthly basis in July and 2.5% from a year ago, in line with economists' expectations, hopes for contained inflation in the US forging the way for more interest rates cuts ahead should augur well to boost local market sentiment.

Immediate index support remains at the recent correction low of 1,633, with 1,620 and 1,600 acting as stronger supports. Key resistance will be the recent high of 1,684, then 1,695, the Dec 2020 high, followed by the 123.6%FP (1,702) and 138.2%FP (1,741) of the 1,369 low to the 1,638 high.

As for stock picks this week, lower liner construction, oil & gas and semiconductor related counters which suffered sharp corrections recently should attract more bargain hunters looking to buy for oversold rebound upside.

News Bites

• Malaysia's gross loan growth remained steady at 5.5% YoY in July, as expansion in business borrowings offset a slowdown in corporate bonds.

• Icon Offshore Bhd has announced a slew of acquisitions, including Yinson Holdings Bhd's offshore marine business totalling RM437.5mn, to be paid in shares, that would more than double its fleet size.

• Pansar Bhd has clinched an RM804.7mn contract for the Kuching Urban Transportation System Blue-Line Package 2 in Sarawak.

• Axis Real Estate Investment Trust is proposing a private placement to raise up to RM455mn for repayment of bank financing.

• SkyWorld Development Bhd has proposed to jointly develop a property in Vietnam's Binh Duong Province, its second venture in that country.

• MSM Malaysia Holdings Bhd targets to export 45,000 tonnes of grain sugar to China in 2024.

• TSH Resources Bhd announced changes to its board and management, including the redesignation of its co-founder Datuk Kelvin Tan who will take on the role of executive chairman from Sept 1.

• Pharmaniaga Bhd announced on Friday the appointment of Zulkifli Jaafar as its managing director, effective Sept 1.

• Mah Sing Group Bhd has posted a strong eight-month sales performance of RM1.7bn, putting it on track to meet its minimum annual sales target of RM2.5bn.

• CIMB Group Holdings Bhd posted an 11% increase in net profit for the 2QFY2024 to RM2bn from RM1.8bn in 2QFY2023, due to higher net interest income and non-interest income.

• Malaysia Airports Holdings Bhd's 2Q24 earnings doubled to RM205.8mn due to new airline operations, airlines resuming routes and introducing new services, as well as the implementation of a 30-day visa-free policy for China and India travellers.

• Malaysian Resources Corp Bhd's net profit for 2QFY2024 surged more than fourfold to RM51.2mn from RM10.9mn a year earlier, as contribution from its construction segment doubled.

• IGB Bhd reported that its net profit for 2QFY2024 fell 33% to RM75.2mn from RM112mn in 2QFY2023, mainly due to reduced contribution from its property development and construction segments, alongside lower foreign exchange gains.

• Tan Chong Motor Holdings Bhd's net losses ballooned to RM40.1mn for 2QFY2024 from RM18.1mn a year earlier due to intense competition in the automotive industry at home and abroad.

• EA Technique (M) Bhd booked a net profit of RM94.7mn for 2QFY2024, over 12 times the RM7.8mn it made in 2QFY2023, primarily due to writebacks to other income.

• The value of new-home sales from the 100 biggest real estate companies in China fell about 22% YoY, faster than the 19.7% decline in July, according to preliminary data from China Real Estate Information Corp.

• China's official manufacturing purchasing managers index declined to 49.1 in August from 49.4 a month earlier.

• The US PCE price index and the core PCE price index for July were both unchanged at 2.5% and 2.6%, respectively.

Source: TA Research - 2 Sept 2024