Tech Stocks May Experience Higher Volatility

Market Review

Malaysia: The FBMKLCI (+0.10%) closed higher, as Banking and Utilities heavyweights, namely CIMB (+7.0 sen) and YTLPOWR (+5.0 sen), boosted sentiment on the local front. In the broader market, bargain hunting was seen in glove-related stocks like HARTA (+8.0 sen), lifting sentiment in the Healthcare sector.

Global markets: Investors were reducing their exposures on Wall Street and rotating into safe-haven assets like Treasury bonds and gold after US crucial job growth data came in stronger-than-expected, indicating a slower easing cycle ahead. Meanwhile, the European and Asian markets closed on a negative note.

The Day Ahead

The local bourse ended the week on a marginally positive note, lifted by gains in the Banking and Utilities sectors. In the US, December job data showed a recovery following the devastating hurricane season in November, exceeding analysts' forecasts. However, Wall Street closed on a negative note as markets anticipated that the Fed could further slow the easing cycle. In the commodities market, Brent crude oil approached the USD80 level amid declining US crude inventories. Gold prices traded above USD2,680 an ounce, while CPO prices rebounded, but remained below the RM 4,400 level.

Sector Focus Mirroring the softer tone of the US market performance, KLCI is set to open lower. Traders may focus on the O&G sector amid the surge in Brent crude oil prices and export-oriented stocks, that could benefit from the strengthening of the Dollar, which is currently hovering around the two-year high. However, the upside of the Technology stock may be limited following the announcement of further US restrictions on AI chip exports to Malaysia. Nevertheless, we believe domestic- themed plays may take the lead in the near term ahead of Trump's inauguration January 20. Key themes to watch include JSSEZ initiative, Penang's ongoing LRT project and potential emergence of Sarawak as an energy hub.

FBMKLCI Technical Outlook

The FBMKLCI rebounded off the 1,600 psychological support after breaking below the MA lines. The MACD histogram continued to expand negatively, while the RSI reading remains below 50, indicating negative momentum at the current juncture. Resistance is expected around 1,617-1,622, while support is set at 1,582-1,587.

Company Briefs

Tenaga Nasional Bhd or TNB (TENAGA) said its unit TNB Western Energy Bhd (TNB WE) has been slapped with an income tax bill amounting to RM291.55m from the Inland Revenue Board for the year of assessment 2018. TNB WE is an indirect wholly- owned subsidiary. The national utility company said TNB WE had on Dec 31, 2024 filed a judicial review application at the High Court to challenge matters arising from the assessment notice. On Thursday, the High Court had granted an interim stay of all further proceedings, including the enforcement of the notice, until the full and final disposal of the judicial review leave application. (The Edge)

Berjaya Corporation Bhd (BJCORP) is seeking a new partner as it bids for a proposed multibillion-dollar high-speed rail (HSR) line between Kuala Lumpur and Singapore, after Malaysian Resources Corp Bhd (MRCB) withdrew from the consortium last month, Berjaya Corp founder Tan Sri Vincent Tan Chee Yioun Chiun told reporters after officiating the Brahmarpanam Soup Kitchen in Kuala Lumpur. The consortium now comprises Berjaya Rail Sdn Bhd, Keretapi Tanah Melayu Bhd, IJM Corporation Bhd (IJM), and technical partners such as Deutsche Bahn AG, Hitachi Rail and Hyundai Rotem Co. (The Edge)

Sime Darby Property Bhd (SIMEPROP) has acquired two modern double-storey logistics warehouses in Bandar Bukit Raja, Selangor for RM232m. The assets - previously owned by a 50:50 joint venture with a Japanese consortium - consolidates Sime Darby Property's ownership of the logistics assets, according to its statement. The warehouses have a combined net lettable area of about 700,000 square feet. Sime Darby Property previously partnered Japan's Mitsui & Co Ltd and Mitsubishi Estate Co Ltd to jointly develop and lease the built-to-suit facilities in Bandar Bukit Raja. (The Edge)

Uzma Bhd (UZMA), through its subsidiary Setegap Ventures Petroleum Sdn Bhd (SVP), has secured a one-year contract extension worth RM100m from Petronas Carigali Sdn Bhd. The upstream supportive services provider said the contract is for the provision of coiled tubing and services for Petronas Carigali's field offshore in east Malaysia. (The Edge)

Metronic Global Bhd (MTRONIC), which provides system integration services and integrated management systems, announced that its subsidiary, MAT JV Sdn Bhd, has been awarded a RM31m contract by Gamuda M&E Sdn Bhd to supply instrumentation systems for the Sungai Rasau Water Supply Scheme project. Under the agreement, MAT JV will undertake the supply, installation, testing, commissioning and maintenance of instrumentation systems. (The Edge)

Kumpulan Perangsang Selangor Bhd (KPS) said its subsidiary's appeal to the Inland Revenue Board (IRB) against the RM7.89m capital gains tax and penalty that was imposed on the company in November last year was accepted. The appeal was filed by its wholly-owned Bold Approach Sdn Bhd on Dec 17 last year. (The Edge)

Key Alliance Group Bhd (KGROUP) has proposed to consolidate its shares on a 30- to-one basis to improve its capital structure and aims to reduce the volatility of the trading price for its shares. Based on its closing price of 0.5 sen on Jan 3, according to the filing, the shares could theoretically adjust to 15 sen post-consolidation. Upon completion, the group's share base would shrink to 122.61m shares from 3.68bn, with a share capital of RM193.39m. Key Alliance has also proposed a capital reduction of up to RM96m of its issued share capital to offset accumulated losses of RM101.05m at the group level as of Sept 30, 2024 (2QFY2025). (The Edge)

Source: PublicInvest Research - 13 Jan 2025