Significant Oversold, Accumulation May Emerge

Market Review

Malaysia: The FBM KLCI (-4.63%) tumbled as investors took a negative cue from the regional markets following the more hawkish tone from the BOJ that could potentially hurt Japanese corporates' margins. Additionally, the reverse carry trade has caused a meltdown in many global exchanges.

Global markets: Wall Street ended lower dragged by Tech heavyweights like NVDA (-6.36%) following the global meltdown, but the losses on Wall Street have narrowed following the better ISM services PMI data. Meanwhile, both the European and Asia stock market ended lower affected from the recent Japan’s monetary policy.

The Day Ahead

With the Yen reverse carry trade theme, the Asian stock markets have taken a significant beating, causing Malaysia's market to crater 4.6%-9.42% across both large-cap and smaller indices; the biggest declining sectors include Properties and Technology. Meanwhile, Wall Street gapped down but narrowed the intraday losses after the US services PMI data came in better-than-expected, which alleviated earlier recession fears. We believe the market could have fallen to a more acceptable level, and an accumulation phase may emerge in the near term. Currently, global futures are rebounding around 1%. In the commodity markets, Brent oil declined towards USD75 and formed a hammer candle, while gold trended sideways along USD2400, and the FCPO price tanked below RM3800.

Sectors Focus: Despite the weak performance in the US markets, we believe the overall selling pressure might have been well digested, at least for the near term, although there might be margin calls happening later this week. We believe the strongest rebound may occur within large-cap stocks in the most lagging sectors from yesterday, namely Technology, Property, and Construction, where the catalysts are still revolving around data centers. Additionally, the Finance segment might be attractive for investors to pick up once foreign funds return.

FBMKLCI Technical Outlook

The FBM KLCI index ended significantly lower towards 1,536 level. The technical readings on the key index were negative with the MACD histogram forming another negative histogram bar and the RSI is oversold. The resistance is envisaged around 1,551-1,556 and the support is set at 1,516-1,521.

Company Brief

Berjaya Food Bhd (BJFOOD) said on Monday its international arm has secured the rights to operate Starbucks stores in Iceland, Denmark and Finland. The expansion by Berjaya Food International, or BFI, marks the first entry of a Malaysian public- listed food-and-beverage company into Nordic markets. BFI will focus on local hiring and sourcing while lending its culinary and operational expertise. (The Edge)

Sasbadi Holdings Bhd (SASBADI) has secured two contracts from the Ministry of Education to supply reprinted textbooks to schools, worth an estimated RM11.71m. The group said the first contract, awarded to its wholly owned subsidiary Sasbadi Sdn Bhd, has an estimated contract value of RM6.89m, while the second contract, awarded to its indirectly owned subsidiary The Malaya Press Sdn Bhd, is worth RM4.82m. (The Edge)

Notion VTec Bhd (NOTION) logged an 11-fold increase in net profit for the third quarter ended June 30, 2024 (3QFY2024) to RM20.25m from RM1.82m a year earlier, on the back of higher revenue. This is Notion VTec's best quarterly net profit since 4QFY2018, when it reported earnings of RM36.54m. Quarterly revenue increased 63% to RM135.5m from RM83.2m. (The Edge)

MISC Bhd (MISC) chief operating officer Zahid Osman will take over as the group’s president and group chief executive officer from Aug 16, replacing Captain Rajalingam Subramaniam, who will step down from his role on Aug 15, after less than two years on the job. MISC said Rajalingam is leaving to pursue other interests. (The Edge)

Malayan Banking Bhd (MAYBANK) has appointed two new independent non- executive directors, Chiam Sou Hong and Vittorio Furlan, effective Monday. Meanwhile, existing independent non-executive director Edwin Gerungan will retire from the board on Aug 23 after nine years of service. The changes bring Maybank's total number of directors to 12. (The Edge)

The High Court has allowed RHB Bank Bhd’s (RHBBANK) application for a summary judgement against Ireka Corp Bhd (IREKA) for the bank's RM6.53m claim over an alleged default in a revolving credit facility. The summary judgement entails a court order for Ireka, as the corporate guarantor for the revolving credit facility granted to its wholly owned subsidiary Ireka Engineering & Construction Sdn Bhd, to pay the revolving credit amounting to RM6.53m up to Dec 31, 2023. (The Edge)

Talam Transform Bhd (TALAMT) said it plans to dispose of a 27.72-acre piece of land in Sepang to a unit of IJM Corp Bhd (IJM) as partial debt repayment. Its wholly owned subsidiary Talam Leisure Development Sdn Bhd has agreed to sell the land to Ever Mark (M) Sdn Bhd, a wholly owned subsidiary of IJM Properties Sdn Bhd. IJM Properties is a wholly owned unit of IJM Corp. The deal involves the setting off of RM66m of indebtedness, and a RM18m interest waiver on the debt owed by Talam Transform to IJM Properties. (The Edge)

Jati Tinggi Group Bhd (JTGROUP) secured an engineering, procurement, construction, and commissioning sub-contract worth RM33.8m from Gamuda Bhd’s (GAMUDA) wholly owned subsidiary Gamuda Engineering Sdn Bhd. Jati Tinggi said the sub-contract was awarded to its unit Jati Tinggi Holding Sdn Bhd, to provide horizontal directional drilling work in Gombak, Selangor. (The Edge)

Handal Energy Bhd (HANDAL) said a firm in which its group managing director Sunildeep Singh Dhaliwal is a substantial shareholder is suing the offshore crane services provider over an alleged unpaid payment. The firm, Seaoffshore Shared Sdn Bhd, is claiming from Handal a purported outstanding sum of RM9.58m as at June 30, 2024, and another sum of RM170,369 that was invoiced in July 2024.

Seaoffshore's claim against Handal is for payment for purported management services rendered. (The Edge)

Source: Mplus Research - 6 Aug 2024