Review & Outlook

With technical momentum and trend indicators on the FBM KLCI worsening following last week's profit-taking correction, further downside correction is likely this week, with lack of firm buying commitments from investors amidst weak market undertone given absence of positive domestic catalysts to discourage bargain hunting. Moreover, with rising worries over further weakness in local and regional currencies vis-à-vis the US dollar given increasing market expectations for a Donald Trump victory in the upcoming US Presidential elections, the bleaker regional tone could spill-over to dampen domestic market sentiment. As for the index, following last week's correction, we are forced to revise lower immediate support to the 1,600 psychological level, with next crucial support coming in at the 200-day moving average level of 1,588, and next at 1,575, the 76.4%FR level. On the upside, immediate resistance is adjusted down to last week's high of 1,648, with next upside hurdles at 1,660, and recent highs of 1,675 and 1,684. On stock picks for this week, mostly construction, oil & gas and technology lower liners should attract buyers looking for recovery upside after the recent sharp profit-taking corrections.

News Bites

• Malaysia's leading index continued to demonstrate strong growth momentum in August, with a growth of 4.0% to 114.3 points from 109.9 points in the same month of the previous year.

• Tenaga Nasional Berhad is conducting a pre-feasibility study for a potential Sarawak to West Malaysia link, according to Sarawak premier Tan Sri Abang Johari Tun Openg.

• Gamuda Bhd said its 75%-owned joint venture company has been appointed as the total development contractor to build a hydroelectric plant in Sabah for RM3.0bn.

• Uzma Bhd's foreign subsidiary, Uzma Engineering Limited Philippine Branch, has signed a well services contract with Philippine Geothermal Production Company, Inc. for the provision of drilling cementing services.

• ACE Market-bound OB Holdings Bhd's wholly-owned subsidiary has received a dispute notice from a customer, Nature One Dairy (Hong Kong) Ltd, for allegedly breaching the purchase and supply agreement between the two.

• My E.G. Services Bhd's sub-subsidiary MYEG Philippines Inc., has formed a partnership with the National Home Mortgage Finance Corporation to integrate the MYEG payment gateway into the latter's online payment service platform.

• MN Holdings Bhd has partnered with Protech Builders Sdn Bhd to jointly tender for sub-contract works for the construction of a data centre project.

• Cabinet Holdings Bhd has secured a RM22.5mn contract from Pamir Development Sdn Bhd for M&E installation works for a project in Johor Bahru.

• Padini Holdings Bhd announced plans to refurbish nine stores, open four new outlets, and close one location in Malaysia in the FY2025 as part of efforts to streamline its retail operations.

• Malakoff Corp Bhd said the deadline for the fulfilment of the conditions precedent in the group's proposed acquisition of a 49% stake in solid management company E-Idaman Sdn Bhd has been extended for a third time till Jan 28, 2025.

• Resintech Bhd has proposed the acquisition of a 4,280-sq-metre piece of leasehold industrial land in Telok Panglima Garang, Selangor for RM11mn to support future expansion.

• ACE Market-bound 3REN Bhd's public issue of 32.5mn shares made available for application by the Malaysian public has been oversubscribed by 84.1x.

• China's industrial profits fell 27.1% YoY in September, following a 17.8% fall in August, while earnings fell 3.5% in the first nine months versus a 0.5% rise in the January-August period.

• The University of Michigan said its consumer sentiment index for October was upwardly revised to 70.5 from a preliminary reading of 68.9.

Source: TA Research - 28 Oct 2024