Focusing On The Financial and Commodity Sectors

Market Review

Malaysia: The FBM KLCI (+0.37%) rebounded as buying pressure were observed in Telco & Media and Utilities heavyweights; tracking the positive regional markets’ performance and overnight rally in the US market. The Technology sector (+0.90%) gained momentum, benefiting from a weaker ringgit bias.

Global markets: Despite better-than-anticipated September job growth, Wall Street ended mildly lower, as CPI and unemployment claims failed to uphold traders' expectations of a robust US economy. Meanwhile, European markets closed lower, while Asian markets rose with China resuming its rally after the big sell-off.

The Day Ahead

The FBM KLCI and FBM Small Cap indices rebounded slightly, in line with the positive performance of regional markets. Meanwhile, US stock markets took a breather near all-time highs after CPI and Core CPI data exceeded expectations. Traders are now focusing on the upcoming PPI data to gauge the Fed’s future interest rate moves. Currently, markets are pricing in an over 80% chance of a 25 bps cut at the November FOMC meeting. In the commodities market, Brent crude oil surged over 3%, driven by ongoing concerns in the Middle East and expectations of rising energy demand in the US and China following the release of stimulus packages. Gold also rebounded, moving slightly above USD2,630, while crude palm oil rose to close near RM4,300.

Sector Focus: In the broader market, investor attention will likely be on the PBBANK- LPI deal, with PBBANK acquiring a 44.15% stake in LPI. Also, we expect traders to position themselves ahead of Budget 2025, particularly in the e-invoicing, Construction, Property, Building Materials, Utilities, and Consumer sectors, as speculation grows around potential mega projects and realignment of subsidies. We also anticipate decent rebound from Plantation and O&G stocks due to the spike in crude oil and CPO prices.

FBMKLCI Technical Outlook

The FBM KLCI index closed higher at the 1,640 level. Meanwhile, the technical readings on the key index are improving, with the MACD histogram formed the rounding bottom formation, but the RSI is still below 50. The resistance is envisaged around 1,655-1,660, and the support is set at 1,620-1,625.

Company Brief

Public Bank Bhd (PBBANK), the third-largest bank in Malaysia by assets, is acquiring a 44.15% stake in insurer LPI Capital Bhd (LPI) for RM1.72bn in cash from the family of the late Tan Sri Teh Hong Piow. Teh, who passed away in 2022, founded Public Bank as well as LPI, which mainly provides general insurance. His estate holds a 1.41% direct stake in LPI and another 42.74% through its private vehicle Consolidated Teh Holdings Sdn Bhd. Public Bank will also be required to make a mandatory general offer for the remaining shares it does not own, at the same price of RM9.80 per share. The bank intends to maintain LPI’s listing status on Bursa Malaysia’s Main Market. (The Edge)

Top Glove Corporation Bhd‘s (TOPGLOV) net losses narrowed sharply for the three months ended Aug 31, 2024 (4QFY2024) as sales surged, while the world’s largest glovemaker by capacity also booked gains from land sale. Net losses for the quarter was RM3.57m, compared to RM461.73m over the same period last year. The company said it booked a RM39.35m gain on disposal of property, plant and equipment during the quarter. Revenue for the quarter rose 75% year-on-year to RM835.31m from RM476.06m. The company did not declare any dividend. (The Edge)

Sunway Bhd’s (SUNWAY) unit Sunway Developments Pte Ltd (SDPL), together with Hoi Hup Realty Pte Ltd, have been awarded a parcel of land by the Housing and Development Board of Singapore. This was after the duo’s successful joint tender for the land. The leasehold land, measuring 23,512 square metres at Tampines, will be used for a mixed commercial and residential development worth S$668.28m (RM2.19bn). (The Edge)

KJTS Group Bhd (KJTS) has secured a subcontract worth RM12.3m for a data centre project in Selangor. The building support services provider said the subcontract for the supply and installation of air-conditioning and mechanical ventilation pipework, complete with equipment, was awarded by Sunway Engie DC Sdn Bhd. Sunway Engie is 70%-owned by Sunway Engineering Sdn Bhd and 30% by Engie Services Malaysia Sdn Bhd. Sunway Engineering, in turn, is fully owned by Sunway Construction Sdn Bhd, a wholly-owned unit of Sunway Construction Group Bhd (SUNCON). (The Edge)

Construction and property development company MGB Bhd (MGB) will undertake mixed development and residential projects on 26 acres of land in Taman Bukit Serdang, Seri Kembangan with a combined gross development value of RM861.35m. The company, which is 57.98%-owned by LBS Bina Group Bhd (LBS) is teaming up with Talam Transform Bhd (TALAMT) to develop 16.5 acres of land for a mixed development project that includes commercial shop lots and affordable housing under the Rumah Selangorku scheme. (The Edge)

Sapura Resources Bhd (SAPRES) has issued show cause letters to its managing director Datuk Shahriman Shamsuddin and appointed a new acting MD. The company said Shariman "remains on leave of absence", confirming a report by The Edge on Wednesday that his leave has been extended. The filing did not reveal the duration of Shahriman's leave of absence, but The Edge, citing sources, said the leave has been extended for another month. (The Edge)

Trading in Sarawak Cable Bhd’s (SCABLE) shares will be suspended on Friday as the company faces a judicial management order, according to its bourse filing on Thursday. The suspension, including the transfer of shares, will remain in effect until the hearing on Oct 15, 2024. Bursa Malaysia may lift the suspension if the judicial management order is not granted. Otherwise, the trading suspension and transfer suspension will remain until the expiry of the judicial management order as may be granted by the Kuala Lumpur High Court. (The Edge)

Source: Mplus Research - 11 Oct 2024