The FBM KLCI (-0.7%) fell into the red from the opening bell as banking stocks continued to fall alongside the weakening Ringgit. The FBM Fledging (+0.6%) was the sole outperformer amongst the lower liners as the FBM ACE and FBM Small Cap shed 0.4% and 0.1% respectively. On the broader market, the Technology (+0.2%) and Properties (+0.5%) subsectors bucked the market’s weaker trend to close higher.
Market breath remained tepid as losers outpaced winners on a ratio of 416-to- 398 stocks. Traded volume climbed 9.1% to 2.09 bln shares as buying interest was seen among the penny stocks.
Banking stocks took a hammering once again as RHB Bank (-14.0 sen) and Hong Leong Bank (-12.0 sen) led the falls on the Main Board. Public Bank also lost 22.0 sen on the back of profit-taking activities and portfolio reshuffling by fund managers, while BAT and PPB Group shed RM1.06 and 24.0 sen respectively. Meanwhile, United Plantation (-42.0 sen), Batu Kawan (-24.0 sen), Fraser & Neave (- 24.0 sen), TAHPS Group (-23.0 sen) and Rapid Synergy (-22.0 sen) were the major decliners on the broader market.
Broader market leaders include Panasonic Manufacturing, which snapped two straight sessions of losses to close 38.0 sen higher, followed by Versatile Creative (+21.0 sen), Apex Healthcare (+15.0 sen), P.I.E. Industrial (+14.0 sen) and Hong Leong Industries (+11.0 sen). The only five key index constituents to rally yesterday was Petronas Dagangan (+6.0 sen), Westports Holdings (+5.0 sen), Maxis (+3.0 sen) and Digi (+10 sen), while KLCC Properties & REITs rose 1.0 sen after a brokerage raise its target price from RM7.05 to RM7.35.
Key regional benchmark indices were mostly down on Tuesday as negative sentiment spilled over from the U.S. and European stockmarkets from the day before. The Nikkei plunged 1.9% as the Yen tanked, reflecting investors’ disappointment on the unchanged interest rates and smaller-than-expected stimulus package by the Japanese government. Similarly, the Hang Seng plummeted 1.8% after trading activities was suspended yesterday due to Typhoon Nida. The Shanghai Composite Index (+0.2%), however, defied the general downtrend, ending marginally higher after trimming back earlier losses. ASEAN indices, meanwhile, finished mostly down.
US stockmarket rebounded overnight as the Dow (+0.2%) halted its streak of seven consecutive sessions of decline, supported by gains in banking blue chips like Goldman Sachs Group (+1.5%) and J.P. Morgan Chase & Co (+1.6%). On the broader market, the S&P 500 added 0.3%, lifted by the energy sector (+1.8%) after crude oil prices rebounded above the US$40.00 level per barrel mark while the Nasdaq closed 0.4% higher.
European benchmark indices, however, ended mostly lower as the FTSE and CAC fell 0.2% each after the Eurozone’s retail sales for June 2016 rose 1.6% Y.o.Y - slightly below economists’ expectations of 1.7% rise. The DAX gained 0.3%, while notable gainers include banking stocks like Societe Generale SA (+3.2%), HSBC (+4.5%) and Deutsche Bank AG (+0.7%).
THE DAY AHEAD
We expect the market’s volatility to continue amid the continuing lack of sustainable catalysts to allow the FBM KLCI to break out of its rangebound trend. As it is, the spate of corporate results released thus far has not provided significant leads for renewed buying.
However, there could be some near term rebound after yesterday’s retreat, in tandem with the positive overnight U.S. stockmarket performance and the recovery of oil prices. Therefore, we think the market could rebound to above the 1,650 level and the 1,660 level amid the return of selected bargain hunting activities.
The lower liners and broader market shares are also expected to see renewed trading activities, albeit the gains could be curtailed by quick profit taking activities.
COMPANY BRIEFS
Tadmax Resources Bhd has got official government approval to build a 1,000 MW combined cycle gas-fired power plant in Pulau Indah, Selangor. The letter of award would hinge on the finalisation of the agreement relating to the project with relevant parties and further subjected to changes arising from negotiations prior to submission to the Energy Commission. (The Star Online)
A joint-venture (JV) between TRC Synergy Bhd and two Sarawak-based companies, Endaya Construction Sdn Bhd and Pembinaan Kuantiti Sdn Bhd, has netted a RM1.30 bln subcontract for the development and upgrading of the Pan Borneo Highway’s Batang Skrang-Sungai Awik Bridge stretch. The Sarawak stretch of the Pan Borneo Highway measures 1,089 km and is expected to be completed by 2022. (The Star Online)
DRB-Hicom Bhd has revived plans to sell its 90.0% stake in Singaporean firm, Corwin Holding Pte Ltd, which owns The Verge commercial development at Serangoon Road, Singapore, to Lum Chang Holdings Ltd (LCH). The sale is subject to terms to be finalised in the definitive agreements for the proposed sale.
Upon signing of the term sheet, LCH will commence due diligence on Corwin as well as commence negotiations with the vendors to agree and finalise the terms of the binding definitive agreements for the sale within a month or such other date to be mutually agreed. The proposed disposal allows DRB-Hicom to unlock the value of its investment in Corwin.
The company had first announced its disposal plans in Corwin to Evolutyon Real Estate Investment Holding Pte Ltd for S$285.3 mln in December 2015, but announced in May 2016 that the deal was scrapped due to the inability of the purchaser to fulfil its contractual obligations on the agreed completion date. (The Edge Daily)
ECS ICT Bhd’s 2Q2016 net profit dipped 21.3 Y.o.Y to RM6.3 mln due to dampened demand for information and communications technology (ICT) products from consumer and enterprise sectors. Revenue for the quarter dropped 4.4% Y.o.Y to RM400.2 mln.
For 1H2016, cumulative net profit fell 34.2% Y.o.Y to RM11.4 mln. Revenue for the quarter declined 11.3% Y.o.Y to RM834.9 mln. (The Edge Daily)
Comintel Corporation Bhd has signed a Memorandum of Understanding to implement telecommunications and ICT solutions worth US$42.9 mln (RM174.0 mln) in the west African nation of Guinea. The two-year project — to provide demand-driven innovative telecommunications solutions that can further improve service delivery in education, healthcare and data management is expected to commence in the early 2017. (The Edge Daily)
Malaysian Pacific Industries Bhd has named Manuel Zarauza Brandulas as its new Managing Director (MD) to succeed Peter Nigel Yates, who will be retiring on 8th August 2016. Brandulas joined HLMG Management Co Sdn Bhd, a related company, as its MD in 2015. Prior to joining HLMG, he was with Seoul Semiconductor as its MD and during his five-year stint in Seoul Semiconductor, he was instrumental in driving the company to achieve its first US$1.00 bln (RM4.05 bln) worldwide revenue. (The Edge Daily)
Datasonic Group Bhd has clarified it is not the current principal supplier of the Malaysian passport booklets and chips to the Home Ministry. This follows a report stating the company was the principal supplier of the passports and many of the chips used on the data page, which was alleged to have defects.
Percetakan Keselamatan Nasional Sdn Bhd (PKN), a company privatised by government-owned National Printing Department, has been given a six-month extension to supply 2.0 mln passport booklets and chips from 1st June 2016 to 30th November 2016 by the government.
Datasonic was awarded the contract to supply Malaysian passport chips for five years, in 2015. The contract to the supply of 12.5 mln passport chips only begun from 1st Dec 2016 to 30th November 2021 for a contract sum of RM318.8 mln. (The Edge Daily)
Green Packet Bhd has emerged as a substantial shareholder of loss-making Yen Global Bhd after acquiring a 22.0% stake in the company for RM18.2 mln, which will give it immediate access to the Internet of Things (IoT) business. Green Packet has acquired 30.3 mln shares of the total issued and paid-up capital of Yen Global via an off-market direct business transaction at a transaction price of 60 sen per share, which was 35.1% lower than its price of 92.5 sen per share at closing on 3rd August 2016. (The Edge Daily)
http://klse.i3investor.com/blogs/MplusOnline/101374.jsp
