The 'Trump Sentiment' Remains Strong

Market Review

Malaysia: The FBMKLCI (-0.67%) ended lower, as profit-taking emerged in the Industrial Products & Services and Utilities heavyweights. Malaysia’s Services sector, however, recorded a 5.9% YoY growth, fuelled by the rising numbers of international and domestic tourists, according to DOSM.

Global markets: The Wall Street hit fresh highs, climbing alongside US Treasury yield and commodities after Donald Trump wins the US Presidential Election and the Fed reduced the interest rate by 25 bps. Meanwhile, the European markets closed higher, while Asian markets ended on a mixed note.

The Day Ahead

Sentiment on the local bourse shifted as profit-taking activities emerged. Despite US jobless claims coming in above consensus, Wall Street continued to rally, driven by ongoing optimism following Donald Trump’s victory and the Fed’s 25 bps rate cut. Looking ahead, we anticipate stronger-than-expected sentiment in the US, bolstered by expected corporate tax cuts, while remaining cautiously optimistic on the local front. Also, the interest rate spread between the US and Malaysia may support the ringgit, albeit at a more moderate pace. In the commodities market, Brent crude oil traded flat around USD75 per barrel. Meanwhile, gold prices rebounded above USD2,700 following the Fed’s rate cut. CPO prices continued to rally, closing near the RM5,000 level.

Sector Focus: With Wall Street reaching new highs, fuelled by the positive “Trump sentiment” and the rate cut, we expect buying interest to spill over into the local market, particularly in the Technology sector as the ringgit environment still favours the export-driven companies. Besides, as we approach earnings season, we believe that earlier data center projects will begin contributing to earnings. As a result, we expect sectors such as Construction, Building Materials, and Property to perform well in the near term.

FBMKLCI Technical Outlook

The FBM KLCI index closed lower towards the 1,623 level. However, the technical readings on the key index were mixed, with the MACD histogram formed positive bars, but the RSI trended below 50. The resistance is envisaged around 1,638-1,643, and the support is set at 1,603-1,608.

Company Briefs

Ekovest Bhd’s (EKOVEST) largest shareholder Tan Sri Lim Kang Hoo is exploring selling his toll-road business Konsortium Lebuhraya Utara-Timur (KL) Sdn Bhd (Kesturi) for up to RM5bn, Bloomberg reported citing people with knowledge of the matter. Ekovest owns 60% of Kesturi, while the remaining balance is held by the Employees Provident Fund (EPF). The report said Lim is working with a financial adviser on the potential divestment of a majority holding closely held in Kesturi. Deliberations are ongoing and Ekovest could still keep the assets, the source said. (The Edge)

Eco World Development Group Bhd (ECOWLD), via its 81%-owned subsidiary Mutiara Balau Sdn Bhd, is buying 10 parcels of land measuring 847.25 acres in Semenyih, Selangor for RM742.41m, cash. It plans to use the plots for a new mixed development called Eco Forest 2, which is expected to have an estimated gross development value of RM4.6bn. Mutiara Balau on Wednesday inked two conditional sale and purchase agreements to buy the land from Boustead Properties Bhd’s sister companies, Boustead Plantations Bhd and Boustead Palau Sdn Bhd. The transaction follows Mutiara Balau's participation in a request for proposal process initiated by Boustead Properties Bhd for development of the plots, which are located next to EcoWorld's Eco Forest township. Boustead Properties is also the shareholder of the remaining 19% in Mutiara Balau. (The Edge)

Mah Sing Group Bhd (MAHSING) has acquired a 5.24-acre freehold parcel in Old Klang Road for approximately RM113m from Team Keris Bhd to develop a new transit-oriented development (TOD) named M Aurora. The sale and purchase agreement was inked on Thursday, and the project is expected to be open for registration in the first quarter of 2025. M Aurora will have an estimated gross development value of RM660m, it said in a statement. (The Edge)

Pentamaster Corp Bhd (PENTA) said its net profit fall 49.9% to RM11.77m for the third quarter ended Sept 30, 2024 (3QFY2024), from RM23.49m a year ago, dragged down by lower automated test equipment (ATE) sales performance and foreign exchange losses. The quarterly net profit is the lowest since 1QFY2018 when it posted a net profit of RM7.32m. Revenue for the quarter dropped 17% year-on-year to RM150.18m from RM180.74m, as the ATE division’s sales fell nearly 46% to RM53.42m. No dividend was declared for the quarter. (The Edge)

Sentral REIT (SENTRAL), which mainly manages office towers, said its net property income rose 25% in the third quarter ended Sept 30, 2024 from a year earlier, boosted by revenue from a newly acquired property. Net property income was RM37.6m, helping to lift net distributable income to RM20.5m, the real estate investment trust said in an exchange filing. The trust did not declare income distribution for the quarter. (The Edge)

KKB Engineering Bhd has secured contracts worth a combined RM93m from several companies with key projects in the industrial and infrastructure sectors. KKB said the latest contracts include a three-year price agreement from Petroleum Sarawak Bhd (Petros), a sub-contract from Bina Puri Builder Sdn Bhd — a wholly owned unit of Bina Puri Holdings Bhd (BPURI), and a purchase order from Greenchain Capital Sdn Bhd. (The Edge)

Software company Microlink Solutions Bhd (MICROLN) has secured a RM83.51m contract from the Ministry of Home Affairs (KDN) to develop and supply an advanced passenger screening system for the Immigration Department. The Main Marketlisted company, whose share price has fallen 84% year-to-date, said the two-year contract was awarded to its wholly owned unit Microlink Systems Sdn Bhd (MSSB). “The project is subject to a formal agreement to be entered into between KDN and MSSB,” it said. (The Edge)

FGV Holdings Bhd (FGV) said its indirect subsidiary FGV Bulkers Sdn Bhd is being sued for allegedly breaching an agreement for the supply of palm kernel shells. The plantation giant said that the lawsuit was filed by South Asian International Distribution Sdn Bhd, seeking damages totalling RM90.84m for losses incurred due to the alleged breach. “The company does not expect that there will be any material operational and financial impact to FGV Bulkers and FGV from the suit for the financial year ending Dec 31, 2024,” FGV said. (The Edge)

Southern Steel Bhd (SSTEEL) has settled its legal dispute over the construction of a hot-rolled coils plant with Italian plant builder Danieli & C Officine Meccaniche SpA, which started in August 2016. The parties have inked a settlement agreement on Wednesday, it said, under which Danieli agreed to pay Southern Steel’s wholly owned Southern HRC Sdn Bhd (SHRC) €42.48m (RM187.08m), which comprises €35.48m for the plant and €7m for related spare parts and equipment. In return, SHRC will transfer ownership of the plant to Danieli. (The Edge)

Source: Mplus Research - 8 Nov 2024