Focusing On The Upcoming FOMC Meeting

Market Review

Malaysia: The FBM KLCI (+0.84%) rebounded strongly, as Banking and Industrial Products & Services heavyweights, namely CIMB (+23.0 sen) and PMETAL (+17.0 sen), boosted the sentiment on the local front; in line with the US stock markets' performance despite the hotter-than-anticipated key inflation data.

Global markets: The dollar index extended its decline, and Wall Street closed mixed as investors traded cautiously ahead of the FOMC meeting scheduled for this Thursday. Meanwhile, European stock markets ended mixed, while Asian stock markets closed on a positive note.

The Day Ahead

The FBMKLCI rebounded last week, alongside broader market gains and small-cap stocks, as sentiment improved following a recovery in crude oil prices. In the US, Wall Street ended on a mixed note: the Dow reached record highs, while the Nasdaq saw a slight decline as tech stocks lagged ahead of the upcoming FOMC meeting. Traders appear to be pricing in a potential 50bps interest rate cut, aimed at steering the economy towards a soft landing. This week, traders will be focusing on the US retail sales, while the buying momentum may extend on local front. In the commodities market, Brent oil extended its recovery due to potential production cuts in the Gulf of Mexico, while gold surged to a record high above USD 2,580 as the market anticipates the rate cut this week. On the other hand, crude palm oil closed lower, nearing RM3,800.

Sector Focus: The Nasdaq's softer performance, combined with the stronger ringgit at RM4.298/USD, may negatively impact sentiment in the technology sector. However, the strong ringgit could support domestic sectors such as Consumer and Utilities. Additionally, we see potential in Construction, Property, and Building Materials, as earnings from data center projects may start to materialize moving forward.

FBMKLCI Technical Outlook

The FBM KLCI index closed higher towards the 1,652 level. However, the technical readings on the key index were mixed, with the MACD histogram forming another negative bar but the RSI hooked above 50. The resistance is envisaged around 1,667–1,672, and the support is set at 1,632–1,637.

Company Brief

The Employees Provident Fund and Lembaga Tabung Haji are no longer substantial shareholders of Globetronics Technology Bhd (GTRONIC) following the company's recent announcement that its external auditor KPMG PLT had voluntarily resigned. EPF sold 9.48m Globetronics shares on Sept 10, while Tabung Haji disposed of 4.02m of the company's shares — the same day that Globetronics announced KPMG's departure and its shares dived over 30%. (The Edge)

Pansar Bhd (PANSAR) has bagged a RM777.11m road construction contract related to Phase 2 of the Sabah-Sarawak Link Road (SSLR) project. The package involved will connect RH Aling in Limbang to Bukit Pagon at the border between Sarawak and Brunei. (The Edge)

Seal Incorporated Bhd’s (SEAL) associate company, MSR Green Energy Sdn Bhd, has accepted a letter of award from Sabah Electricity Sdn Bhd for a battery energy construction job worth RM645m. The project involves the engineering, procurement and construction of a battery energy storage system with a capacity of 100- megawatt and energy storage of 400-megawatt hours in Lahad Datu, Sabah. (The Edge)

Information and communication technology provider HeiTech Padu Bhd (HTPADU) has secured a RM133.73m contract from the Road Transport Department Malaysia (JPJ). The contract involves the development and supply of hardware and software for JPJ, and a revamp of the agency's digital system. (The Edge)

MMAG Holdings Bhd (MMAG) is going to take over Velocity Capital Partner Bhd's (VELOCITY) stake in its 86.09%-owned loss-making subsidiary, courier and logistic firm Line Clear Express Sdn Bhd (LCE). It plans to acquire Velocity Capital's 8.91% stake in LCE for RM13.75m, cash, which will raise MMAG's stake in LCE to 95%. (The Edge)

Integrated water technology solutions provider Cosmos Technology International Bhd (COSMOS) is disposing of its entire equity interest in MCI Etech Sdn Bhd to Loyal Fame Sdn Bhd for RM12.31m, cash. The disposal will result in a total proforma loss of RM42,324. Proceeds from the disposal are intended to be utilised for the group's general working capital. (The Edge)

Source: Mplus Research - 17 Sep 2024