Recovery Returns

• Despite the announcement of economic stimulus package by the Malaysian government on last Friday, it failed to spur further gains as the FBM KLCI (- 1.1%) succumbed to profit taking as the key index snapped a four-day winning streak. The lower liners finished mostly lower as the FBM Small Cap and FBM Fledgling shed 1.3% and 1,0 respectively, while the healthcare sector (+0.1%) outperformed the negative broader market.

• Market breadth turned negative as losers ruled over the gainers on a ratio of 511-to-305 stocks. Traded slipped 33.1% to 2.83 bln shares as the renewed market volatility sapped trading interest.

• Two-third of the key index components fell, dragged down by Hong Leong Bank (-78.0 sen), KLK (-48.0 sen), Hartalega (- 19.0 sen), RHB Bank (-18.0 sen) and Axiata (-16.0 sen). Notable decliners on the broader market include Dutch Lady (-84.0 sen), Carlsberg (-72.0 sen), Yinson (-52.0 sen), Allianz (-30.0 sen) and Ajinomoto (-28.0 sen).

• On the flipside, Fraser & Neave (+44.0 sen), Ayer Holdings (+40.0 sen), Panasonic (+34.0 sen), SCGM (+30.0 sen) and Kluang Rubber (+33.0 sen) advanced on the broader market. Key winners on the FBM KLCI include Hong Leong Financial Group (+20.0 sen), Maxis (+13.0 sen), Tenaga (+10.0 sen), Am Bank (+7.0 sen) and Top Glove (+6.0 sen).

• Asia benchmark staged a pullback from their recent recovery as the Nikkei fell 1.6%, spooked by the rising Covid-19 cases across the globe. The Hang Seng Index slipped 1.3%, while the Shanghai Composite finished 0.9% lower. Asia stockmarkets, meanwhile, finished mostly lower on Monday.

• U.S. stockmarkets started off the week on a brighter note as the Dow jumped 3.2% higher following U.S. President Donald Trump’s announcement on national social distancing guidelines extended to 30th April 2020, coupled with optimism over a coronavirus treatment. The S&P 500 surged 3.4%, anchored by gains in the healthcare sector (+4.7%), whilst the Nasdaq closed3.6% higher.

• Major European stockmarkets – the FTSE (+1.0%), CAC (+0.6%) and DAX (+1.9%), all recovered all their intraday losses to climb into the positive territory in the eleventh trading hour. In the meantime, Eurozone’s Economic Sentiment Indicator fell to 94.5 in March 2020 (from 103.4 in February 2020), marking the steepest decline since the index began in 1985.

THE DAY AHEAD

• Expectedly, Bursa Malaysia turned lower yesterday after chalking n hefty gains in recent days as market’s focus shifted to the prospect of subdue economic performance following the rising number of Covid-19 cases. Nevertheless, the positive developments over the potential of vaccine for Covid-19 may see the recovery continue to take shape.

• With the prevailing market sentiment turning slightly on an upbeat mode, we think that the FBM KLCI would likely to resume its’ recovery, targeting the 1,350 and 1,360 resistances level. A pullback may see the FBM KLCI to be supported at the 1,300 psychological level for the time being. However, should the aforementioned level failed to defend, the next support is pegged at the 1,250 level.

• We take the recent pullback on the lower liners as a healthy move to allow investors to digest their recent gains before taking another stride higher. For now, buying momentum appears to have fizzled as demonstrated by the decline in trading activities. Nevertheless, the healthcare sector, particularly glove-related stocks continue to be in favour amongst investors during the period of volatility.

COMPANY BRIEF

• Ekovest Bhd’s EkoCheras Mall has allocated more than RM10.0 mln to subsidise two months’ worth of rent for its tenants from March 1 to April 30, as well as free parking for its visitors until the end of April. The mall has remained partially open during the Movement Control Order (MCO) to support essential businesses such as supermarkets, pharmacies, and F&B outlets with delivery and takeaway services, as well as enable shoppers to get daily necessities. (The Edge)

• LBS Bina Group Bhd has issued a RM130.0 mln perpetual Sukuk Musharakah to, among others, refinance its financing and borrowings, as well as fund its capital expenditure and asset acquisition. The sukuk represents the first tranche of its RM700.0 mln Perpetual Sukuk Musharakah Programme with a tenor of perpetual non-callable five years and an initial periodic distribution rate of 6.8 per cent per annum. (Bernama)

• Urusharta Jamaah Sdn Bhd, the Finance Ministry’s special purpose vehicle (SPV), has ceased to be a substantial shareholder of Alam Maritim Resources Bhd, after disposing of 4.7 ml shares or a 1.3% stake in the listed company.

• Urusharta Jamaah emerged as a substantial shareholder of Alam Maritim on 28th December 2018, when it took over Lembaga Tabung Haji’s stake in the company. The SPV previously owned a total of 92.0 mln Alam Maritim shares, equivalent to a 9.9% stake. (The Edge)

Source: Mplus Research - 31 Mar 2020