Review & Outlook

Multiple sell signals flashed on technical momentum and trend indicators for the FBM KLCI following last week's profit-taking correction, suggesting further downside correction before the market may attempt to stabilize. The key factor triggering the selldown is the worsening of geopolitical tensions in the Middle East region, with fears of a widening conflict between Israel and the surrounding Arab states, which would force a spike in oil prices and inflation worries. On the other hand, given the positive reaction on US markets due to the much stronger-than-expected September jobs data last Friday, hopes for soft landing for the US economy should cap downside on the market correction.

Immediate index support will be the recent correction low of 1,625, with 1,620 and then 1,600 acting as stronger supports. Immediate resistance is set at 1,660, followed by the recent highs of 1,675 and 1,684, and then 1,695, the Dec 2020 high, as tougher resistance levels.

On stock picks for this week, key banking, construction, telco and utility heavyweights should attract bargain hunters again for rebound upside, given decent upside potential following recent profit-taking corrections.

News Bites

• Privately owned rail construction company Dhaya Maju Infrastructure (Asia) Sdn Bhd is taking up a 57.52% stake in Pestech International Bhd for RM160mn through a restricted issue.

• Velesto Energy Bhd has inked a MOU for a three-year collaboration with SLB, formerly Schlumberger, to enhance its rig capabilities.

• OCR Group Bhd is suing Kumpulan Jetson Bhd over alleged breaches of a RM88.0mn contract to build four blocks of serviced apartments in Jalan Yap Kwan Seng, Kuala Lumpur.

• Solar District Cooling Group Bhd plans to expand its solar and energy efficiency services into Brunei and has entered into a MoU with Bruneibased Serikandi Oil Field Services Sdn Bhd to explore collaboration opportunities.

• EG Industries Bhd is acquiring a 24.08% stake in Thai-based ND Rubber Public Company Ltd for THB198mn (RM26.1mn) as part of its expansion into the 5G photonics and embedded electric vehicle market in that country.

• Sanichi Technology Bhd has proposed to consolidate its shares on a 10- to-one basis and do a capital reduction of up to RM55mn from its issued share capital to offset its accumulated losses of RM93.9mn at the group level as of June 30, 2024.

• Aneka Jaringan Holdings Bhd has aborted its planned private placement of up to 10% of its issued share capital, which was intended to raise up to RM15.5mn.

• MyTech Group Bhd has called off its planned private placement, which was announced on March 18 last year, as the deadline to implement the corporate exercise lapsed on Friday.

• HeiTech Padu Bhd said it is unaware of any corporate development that caused the unusual market activity in its shares, which spiked to a record high.

• Parkson Holdings Bhd's Singapore Exchange-listed Parkson Retail Asia Ltd has exited the exchange's watch list after five years.

• Sime Darby Property Bhd has achieved a 100% take-up rate for XME Business Park 2, which provides 15 ready-built factories with a gross development value of RM66mn, during its preview.

• The US non-farm payrolls increased by 254,000 jobs last month after rising by an upwardly revised 159,000 in August while the unemployment rate slipped to 4.1% versus 4.2%.

• The European Union voted on Friday to impose tariffs as high as 45% on electric vehicles from China in a move set to increase trade tensions with Beijing.

Source: TA Research - 7 Oct 2024