• Despite the firmer unemployment rate data for September 2017, the FBM KLCI (- 0.3%) extended its losses after being traded mostly in the negative territory ahead of the Deepavali public holiday. The lower liners, however, closed mostly higher as the FBM Fledgling and FBM ACE rose 0.2% each, while the Construction (+0.1%) and Technology (+0.3%) sectors outperformed its peers.

• Market breadth stayed negative as losers outnumbered gainers on a ratio of 468- to-395 stocks. Traded volumes slipped 8.6% to 2.89 bln shares as investors booked-in profits amid the holiday shortened trading week.

• Petronas Dagangan (-72.0 sen) topped the big board decliners list, followed by KLK (-64.0 sen), BAT (-48.0 sen), Hong Leong Financial Group (-24.0 sen) and Petronas Gas (-18.0 sen). Significant decliners on the broader market were Padini (-17.0 sen), Selangor Properties (- 16.0 sen), Kawan Food (-13.0 sen), Bursa (-12.0 sen) and Panasonic (-10.0 sen).

• Among the biggest gainers on the broader market include Mercury (+17.0 sen), Globetronics (+11.0 sen), BLD Plantations (+10.0 sen) and Daiboci (+10.0 sen). EITA Resources jumped 10.0 sen after bagging a contract from Mass Rapid Transit Corp Sdn Bhd for RM69.8 mln. Key winners on the FBM KLCI were Genting (+18.0 sen), DIGI (+6.0 sen), Astro (+2.0 sen), Axiata (+2.0 sen) and IJM (+2.0 sen).

• Japanese equities extended their gains yesterday as the Nikkei (+0.1%) registered its twelfth straight winning streak as investors assess the upcoming weekend’s general election that favors Japanese Prime Minister Shinzo Abe's coalition to win roughly a two-thirds majority. The Shanghai Composite added 0.3%, but the Hang Seng Index slipped 0.1% on profit taking in energy and technology shares. ASEAN stockmarkets, meanwhile, ended mixed.

• U.S. stockmarkets extended its gains overnight to close at fresh record high levels overnight, buoyed by the strongerthan-expected corporate earnings. The Dow surged 0.7%, while the broader market saw the S&P 500 and Nasdaq closed 0.1% and 0.01% higher respectively.

• Tracking the positive sentiments on Wall Street, European benchmark indices – the FTSE (+0.4%), CAC (+0.4%) and DAX (+0.4%) all advanced. Investors also shrugged off worries after Spain’s threat to suspend Catalonia’s autonomy, while U.K.’s unemployment rate in August 2017 fell to 4.3% – the lowest since 1975.

The Day Ahead

• Despite the continuing selldown on the index heavyweights, we think that the 1,750 level will provide a strong support following the recent market weakness that has seen the key index shedding some 2.5%. Consequently, we think the key index is due for a rebound as it attempts to find support at the above level.

• Further upsides, however, remain elusive amid the lack of fresh buying interest as yet, in view of the availability of few positive domestic catalysts and incessant selling by foreign funds. Therefore, we think the near term recovery could be limited to the 1,755 level for now, while on the downside, the support is at 1,745 points.

• Meanwhile, the remains substantive trading interest among the lower liners and broader market shares which we see persisting over the near term as trading activities remain in focus among retail players.

Company Brief

• Seacera Group Bhd has secured a contract worth RM216.0 mln to build the Rubber Research Institute of Malaya's centre of excellence in Sungai Buloh, Selangor, from Koridor Padu Sdn Bhd. The sub-contract works for the construction of the centre is expected to be completed in by October 2019. (The Star Online)

• T7 Global Bhd is planning to sell its entire equity stake in 7 New Market Street Holdings Ltd (7NMSH), which owns a 10- storey office block with 18 car park spaces in Birmingham, UK, for £5.6 mln (RM32.2 mln).

• The property, which is currently vacant, is located on 0.19 ac. of freehold land at the edge of the Birmingham Central Business District. The group expects to reap an estimated net gain of £1.7 mln (RM9.7 mln) from the proposed disposal. (The Edge Daily)

• Heitech Padu Bhd has won three contracts totalling RM75.2 mln to establish high voltage interconnection facilities for three solar power plants located in Kedah, Melaka, and Terengganu, from Scatec Solar Solutions Malaysia Sdn Bhd — a unit of Scatec Solar ASA Norway. Currently, the group is waiting for a notice from Scatec Solar before proceeding with the projects. (The Star Online)

• Sapura Energy Bhd, (formerly SapuraKencana Petroleum Bhd), is aborting its joint-venture with Londonbased Subsea 7 S.A. Both parties have mutually agreed to discontinue their SapuraAcergy JV. Consequently, SapuraAcergy's heavy-lift and pipelay vessel, Sapura 3000, has been sold to Sapura Energy, has now become the sole owner of the vessel.

• YFG Bhd was awarded a 36-month contract from Pierre Suite (M) Sdn Bhd to construct apartment buildings in Perak for RM200.0 mln. Project works involved the building, infrastructure and landscaping works of the proposed development in Taiping. (The Edge Daily)

• DiGi.Com Bhd‘s 3Q2017 net profit fell 12.0% Y.o.Y to RM384.6 mln, from RM438.4 mln last year, on the back of weaker revenue contribution, which fell to RM1.57 bln, from RM1.62 bln in the last corresponding year. The group has also declared a tax-exempt dividend of 4.9 sen a share, payable on 22th December, 2017.

• Cumulative 9M2017 net profit, meanwhile, also lost 12.5% Y.o.Y to RM1.12 bln, from RM1.26 bln in 9M2016, in-tandem with lower revenue at RM4.7 bln vs. RM4.93 bln a year ago. (The Star Online)

• Top Glove Corp Bhd is set to unveil an acquisition deal estimated to cost around RM1.0 bln within the next month, which will boost the company' growth momentum.

• In relation to its new condom business, Top Glove said that it has already started the preparations for its condom manufacturing facility, which is expected to be operational in 2018. The group has identified the factory and is currently renovating and restoring the machines. Moving forward, Top Glove is targeting to have about 20 production lines within two years. (The Star Online)

• United Malacca Bhd has signed a conditional agreement to gain a controlling interest on a plot of land in Central Sulawesi, Indonesia.

• The group will be acquiring a 60.0% shareholding in PT Wana Rindang Lestari (WRL) for US$7.2 mln (or RM30.3 mln), which is now 99.9% owned by PT Bintang Gemilang Permai (BGP), with the rest held in another firm, PT Mahkota Nughara Permai.

• WRL is currently involved in agricultural activities, with a business licence from Indonesia's Forestry Ministry to develop a land plot measuring some 59,920 ha. in Central Sulawesi, Indonesia.

• The proposed acquisition is in-line with its strategy of diversifying its crops mix to include cash crops like stevia, coconut, cocoa and coffee, in a bid to widen its earnings base and reduce dependency on a single commodity, palm oil. The proposed acquisition will also allow United Malacca to have immediate access and a controlling ownership over the land. (The Edge Daily)  

Source: Mplus Research - 19 Oct 2017