Commodity Sectors To Be Focused On

Market Review

Malaysia: Despite stronger regional markets performance, the FBM KLCI (-0.71%) saw a pullback after reaching an intraday high of around 1,639 level dragged down sentiment on the index. Moreover, investors might have traded cautiously prior to the non-farm payroll data and ongoing tension in the Middle East.

Global markets: Wall Street closed higher, as the Magnificent-7, like Tesla and Nvidia, buoyed gains in the Nasdaq after a better-than-anticipated jobs data boosted investor confidence in US economy. Meanwhile, both the European and Asian stocks markets closed ended on a positive note.

The Day Ahead

The FBM KLCI experienced a volatile ride over the past few trading days, fluctuating between positive and negative territory due to heightened concerns over tensions in the Middle East. Meanwhile, US stock markets closed on a positive note, rebounding from intraday lows after non-farm payrolls in September exceeded expectations, signalling that the economy remains strong at this point. In the commodities market, Brent crude surged to nearly USD80 per barrel, driven by developments in the Middle East, while gold prices hovered around the USD 2,650 mark. Crude palm oil (CPO) closed at RM 4,300, supported by rising demand from India, the top importer, ahead of the Diwali festive season, coupled with the release of China stimulus packages.

Sector Focus: Given the positive sentiment on Wall Street, coupled with a slightly weakened ringgit, we expect traders to monitor and accumulate selected Technology stocks. Additionally, the strong surge in crude oil and CPO prices is likely to increase investor interest in the O&G and Plantation sectors. Looking ahead to Budget 2025, traders may also position themselves in sectors such as Construction, Property, Building Materials, and Utilities.

FBMKLCI Technical Outlook

The FBM KLCI index closed lower towards the 1,629 level, violating below the long term MA. However, the technical readings on the key index were negative, with the MACD histogram formed another negative bar, but the RSI trended below 50. The resistance is envisaged around 1,644-1,649, and the support is set at 1,609-1,614.

Company Brief

HeiTech Padu Bhd (HTPADU) said it is unaware of any corporate development that caused the unusual market activity (UMA) in its shares which spiked to a record high. HeiTech received the UMA query from Bursa Malaysia after its shares surged by as much as 56 sen, or 15.34%, to a record high of RM4.21. The stock pared some gains to close at RM4.10, still up by 45 sen or 12.33%, making it the second-highest gainer on the stock exchange in terms of value. (The Edge)

Privately owned rail construction company Dhaya Maju Infrastructure (Asia) Sdn Bhd is taking up a 57.52% stake in Pestech International Bhd (PESTECH) for RM160m through a restricted issue. Pestech had entered into a conditional subscription agreement with Dhaya Maju for the subscription of 1.34bn restricted shares at 12 sen apiece, totalling RM160m. Dhaya Maju and the parties acting in concert intend to apply to the Securities Commission Malaysia for an exemption from the obligation to undertake a mandatory general offer. (The Edge)

Velesto Energy Bhd (VELESTO) has inked a MOU for a three-year collaboration with SLB, formerly Schlumberger, to enhance its rig capabilities. The rigs will incorporate well delivery solutions and drilling emissions management solutions from SLB to enhance and optimise its drilling performance and monitor emissions. (The Edge)

OCR Group Bhd (OCR) is suing Kumpulan Jetson Bhd (JETSON) over alleged breaches of a RM88.03m contract to build four blocks of serviced apartments in Jalan Yap Kwan Seng, Kuala Lumpur. The property developer said the lawsuit was filed at the High Court on Thursday by its 50.01%-owned unit O&C Makok Isola Sdn Bhd (OCMI) against Kumpulan Jetson and and its wholly owned subsidiary Jetson Construction Sdn Bhd (JCSB). (The Edge)

Renewable energy company Solar District Cooling Group Bhd (SDCG) plans to expand its solar and energy efficiency services into Brunei. Its wholly owned subsidiary, Solar District Cooling Sdn Bhd, has entered into a MOU with Brunei-based Serikandi Oil Field Services Sdn Bhd to explore collaboration opportunities that will cover the provision and maintenance of building management systems, gas-fired chillers and chilled water systems. (The Edge)

EG Industries Bhd (EG) is acquiring a 24.08% stake in Thai-based ND Rubber Public Company Ltd (NDR) for 198m baht (RM26.05m) as part of its expansion into the 5G photonics and embedded electric vehicle (EV) market in that country. EG Industries plans to establish a testing centre for EV 5G photonics modules in Thailand that will be set up by its newly formed subsidiary, Xtronic Co Ltd. (The Edge)

Precision plastic injection moulding manufacturer Sanichi Technology Bhd (SANICHI) has proposed to consolidate its shares on a 10-to-one basis. It also proposed a capital reduction of up to RM55m from its issued share capital to offset its accumulated losses of RM93.93m at the group level as of June 30, 2024 (1QFY2024). (The Edge)

Construction firm Aneka Jaringan Holdings Bhd (ANEKA) has aborted its planned private placement of up to 10% of its issued share capital, which was intended to raise up to RM15.51m. It said the extension period to complete the private placement will lapse after Oct 5. Meanwhile, MyTech Group Bhd (MYTECH) has also called off its planned private placement, which was announced on March 18 last year, as the deadline to implement the corporate exercise lapsed on Friday. (The Edge)

Source: Mplus Research - 7 Oct 2024