Sentiment Turned Cautious Ahead Of Election

Market Review

Malaysia: In tandem with the poor regional market performance, FBM KLCI (-0.82%) ended lower at 1,601.88, dragged down by heavyweights like MAXIS and CIMB. The Construction (+0.48%) sector was the only winning sector, led by GAMUDA and SENDAI, while the Technology (-1.16%) sector declined the most.

Global markets: The US market observed selling pressure following lacklustre tech results, with the S&P500 and the Dow retraced further. Meanwhile, both the European and Asian markets had ended lower despite China’s residential property sales registered a first on-year increase of 2024 in October.

The Day Ahead

The local bourse ended softer ahead of the US Presidential Election, with all sectors ending in negative territory except Construction. Also, sentiment turned weaker in the US as investors digested earnings reports from Microsoft and Meta Platforms, while Apple posted weaker-than-expected sales in China. Weekly US jobless claims fell more than anticipated, suggesting a robust employment market, while the core PCE index ticked higher, potentially influencing the Fed's decision in the upcoming FOMC meeting. Investors are now looking toward key economic data, including US non-farm payrolls and ISM manufacturing, due later tonight. In the commodities market, Brent crude oil surged amid rising tensions in the Middle East, while gold prices retreated on profit-taking and CPO prices climbed closer to the RM4,700 level.

Sector Focus: Given the weak global market environment and the upcoming US Election, the negative sentiment is expected to spill over to the local front. Thus, we anticipate investors may adopt a defensive stance in a choppy environment, focusing on sectors like REITs. The weakening ringgit could lift sentiment in exportoriented sectors such as Gloves and Furniture. Additionally, the O&G sector could benefit from rising oil prices amid Middle East tensions, while Plantation stocks are
 ikely to trend positively in line with the CPO price rally.

FBMKLCI Technical Outlook

The FBM KLCI index ended at the 1,601 level and closed below all the MA lines. The technical readings on the key index were negative, with the MACD histogram remained negative, and the RSI trended below 50. The resistance is envisaged around 1,616-1,621, and the support is set at 1,581-1,586. 

Company Briefs

FGV Holdings Bhd (FGV) has appointed Fakhrunniam Othman as group chief executive officer of the plantation group effective Nov 1. Fakhrunniam, 57, is currently the group divisional director of FGV’s logistics and support division, a position he has held since Jan 1, 2023. (The Edge)

Datuk Shahriman Shamsuddin, managing director of property and aviation outfit Sapura Resources Bhd (SAPRES), has tendered his resignation with immediate effect, having been put on garden leave for nearly two months. Shahriman, who together with his brother Tan Sri Shahril Shamsudin hold an indirect 51.5% in Sapura Resources, had been put on garden leave since Sept 11, as the company initiated investigations against him. Sapura Resources said Shahriman has also resigned as director of the company, relinquishing directorship of the company's subsidiaries, including SRB One Sdn Bhd, Aero Handlers Sdn Bhd, Aerodome Services Sdn Bhd and Sapura Technics Sdn Bhd, which is currently under winding-up proceedings by the court. (The Edge)

Stock exchange operator Bursa Malaysia Bhd (BURSA) reported its highest quarterly net profit in three years, thanks to higher income across its business segments, including the securities and derivatives market. Net profit for the three months ended Sept 30, 2024 (3QFY2024) surged 41.93% year-on-year to RM85.74m. Revenue for the quarter climbed 33.11% to RM211.26m — also the highest in three years — from a year earlier. Bursa Malaysia did not declare any dividend during the quarter under review. (The Edge)

British American Tobacco (Malaysia) Bhd (BAT) posted a 14.1% rise in its net profit for 3QFY2024, as its operating expenses were significantly reduced by 28.9% YoY, following the group’s substantial investment in the launch of its vaping brand, Vuse, in Malaysia last year. Net profit for 3QFY2024 stood at RM67.91m, compared with RM59.54m a year earlier. Quarterly revenue rose by a marginal 0.5% to RM609.95m from RM606.8m in 3QFY2023, on the back of a 3.3% YoY increase in volume, a better product mix and increased sales from vapour products. The group declared a third interim dividend of 22 sen per share, amounting to RM62.8m, for FY2024, payable on Nov 27. (The Edge)

Sunway Construction Group Bhd (SUNCON) has been awarded additional tenant improvement works (TIWs) for its data centre construction project at the Sedenak Tech Park in Johor for RM347m. The contract was awarded by Yellowwood Properties Sdn Bhd, which raised the contract amount from RM3.2bn initially, to RM3.5bn now. It also said the completion date for the contract remains unchanged, with all phases of both the notice to proceed (NTP) works and TIWs scheduled for completion by February 2026. (The Edge)

Duopharma Biotech Bhd (DPHARMA) has secured five additional supply contracts from Pharmaniaga Bhd (PHARMA), totalling RM87.66m, to provide 10 pharmaceutical and non-pharmaceutical products to government offices and facilities that Pharmaniaga operates. Pharmaniaga’s wholly-owned subsidiary Pharmaniaga Logistics Sdn Bhd awarded four letters of offer (LOOs) to Duopharma (M) Sdn Bhd, and one LOO to Duopharma Manufacturing (Bangi) Sdn Bhd. All additional contracts will remain valid and binding until Dec 31, 2026, or any other date specified by the government. (The Edge)

Haily Group Bhd (HAILY) has secured a contract worth RM65m for the construction and completion of a housing project in Tebrau, Johor. This comprises 206 units of double-storey terrace houses and one power substation. The contract was secured through its wholly-owned subsidiary Haily Construction Sdn Bhd on Wednesday, which had accepted the letter of award for the project from Akipro Architect Sdn Bhd, on behalf of Austin Senibong Development Sdn Bhd. (The Edge)

Utilities engineering services firm MN Holdings Bhd (MNHLDG) has secured a RM63m contract from Tenaga Nasional Bhd (TENAGA) to develop a battery energy storage system (BESS). The contract was awarded to MN Holdings’ wholly-owned MN Power Transmission Sdn Bhd. Under the contract, MN Holdings will carry out the extension of a new 1 x 132-kilovolt (kV) overhead line BESS interconnection facilities bay for TNB, at its existing transmission main intake 132/11kV Santong (air insulated switchgear, or AIS). (The Edge)

Deleum Bhd's (DELEUM) 86.67%-owned indirect subsidiary Deleum Technology Solutions Sdn Bhd (DTS) has bagged two contracts for the provision of Pan Malaysia offshore maintenance, construction, modification (MCM) and hook-up commissioning (HUC) services. The contract value was not disclosed. Deleum said the contracts are for Package A1 - Peninsular Malaysia Asset (PMA), which is oilrelated, and Package A4 - Sarawak Asset (SKA), which is gas-related. The two contracts were awarded by Petronas Carigali Sdn Bhd to DTS. The scope of works includes the provision of manpower, tools and equipment, materials, consumables and other related services. (The Edge)

YTL Power International Bhd (YTLPOWR) is “seeking legal advice regarding potential steps” against unnamed parties that it said are spreading accusations of misconduct by the company in the 1Bestarinet project currently under investigation. In a statement, YTL Power said its 60%-owned YTL Communications Sdn Bhd, which was involved in the project, will continue to provide full cooperation to the Malaysian Anti-Corruption Commission on the investigations. “To the best of our knowledge, we have not breached any contractual terms, nor violated any laws,” the company also clarified, referring to the contract won by the group in November 2011 to provide internet access and virtual learning system in up to 10,000 schools. (The Edge)

Source: Mplus Research - 1 Nov 2024