Volatility To Rise After Trump's Tariffs

Market Review

Malaysia: In tandem with the positive overnight performance in the US, the FBMKLCI (+0.27%) rebounded after 4-days of losses. The Utilities (+1.29%) sector outperformed the rest as bargain hunting activities emerged within the YTL-related counters, while Plantation (-0.66%) sector declined the most.

Global markets: Wall Street edged lower following President Trump's comments on the implementation of tariffs towards Canada, Mexico, and China. Meanwhile, both the European and Asian markets closed higher, buoyed by the positive overnight performance in the US.

The Day Ahead

The FBMKLCI recovered slightly from its downward pressure as bargain hunting activities were seen in banking and utility heavyweights. Meanwhile, Wall Street closed lower following President Trump's tariffs implementation on Canada, Mexico, and China, which took effect on Saturday. Technology sector remained a key focus driven by the rise of China's AI startup, DeepSeek. This week, traders will closely monitor the (i) ISM Manufacturing and Non-Manufacturing PMIs, (ii) initial jobless claims, and (iii) US unemployment rate. In the commodities market, Brent Crude is trading close to USD76 per barrel, while gold prices charged toward an all-time high of USD2,817 before closing slightly below the USD2,800 mark. Meanwhile, CPO prices broke above their short term RM4,278 resistance level.

Sector Focus: Given last Friday's sell-offs in Wall Street and the ongoing negative sentiment in Wall Street futures following President Trump's tariff remarks, we expect the local bourse to mirror the US performance. Investors are likely to shift toward defensive sector like REIT in view of their defensive characteristic and strong quarterly performances due to higher net property income. Meanwhile, we believe renewable energy will remain on traders' radar, driven by various government initiatives, including NETR and LSS and CGPP.

FBMKLCI Technical Outlook

The FBMKLCI index recovered from its 4-days of losing streak. However, MACD histogram and RSI are trending negatively, suggesting upward momentum is weak at the current juncture. Resistance is anticipated around 1,571-1,576, while support is set at 1,536-1,541.

Company Briefs

Compugates Holdings Bhd (COMPUGT) has teamed up with property developer CPG Puncak Sdn Bhd to undertake a mixed-use development on a 14.5-hectare land in Cyberjaya with an estimated gross development value of RM1.36bn. The joint venture (JV) agreement inked between the Compugates' 70%-owned unit Compugates Development and Mining Sdn Bhd (CDMSB), which owns the 14.5- hectare land, and CPG is deemed a related party transaction as Compugates chief executive officer and substantial shareholder Goh Kheng Peow is the father of Compugates' group general manager Keane Goh, who is also a shareholder and director of CPG. The group expects to record a pro forma net gain of RM83.3m upon completion of the proposed JV, which is set to be completed over a 13-year period. (The Edge)

DXN Holdings Bhd (DXN) is terminating its plan to develop a medicine facility and a wellness centre due to a lack of progress and failure to achieve the expected benefits. The group had signed a memorandum of agreement with Persatuan Holistik dan Herba Malaysia (MMHO) in September 2023 for the establishment of the medicine facility, and a memorandum of understanding with European Wellness Centres Inc (EW) in October 2023 for the development of the wellness centre. DXN said it issued a 30-day termination notice to both MMHO and EW. (The Edge)

Cypark Resources Bhd (CYPARK) has achieved commercial operation date (COD) for its remaining 30MW floating solar plant at Danau Tok Uban (DTU), Kelantan. The plant, dubbed DTU1, is one of two 30MW solar installations at DTU. Its sister DTU2, with a 30MW capacity, achieved COD back on Jan 7. The project is Malaysia's largest floating solar installation, according to Cypark. (The Edge)

Vizione Holdings Bhd (VIZIONE) slipped into the red with a net loss of RM79.68m for the second quarter ended Nov 30, 2024 (2QFY2025), reversing from a net profit of RM213,000 a year ago, due to an RM80m impairment of goodwill on consolidation of its shares during the quarter. Quarterly revenue fell 21.3% year-on-year to RM49.5m from RM62.9m, as the completion or near completion of several projects left the group without significant new project commencements. No dividend was declared by the construction player and property developer for the quarter. (The Edge)

Citaglobal Bhd (CITAGLB) signed a deal to buy a 1.58-acre land at Jalan Tun Razak from Bank Islam Malaysia Bhd (BIMB) for RM73m. The energy and construction outfit said it sees the purchase as a strategic opportunity for long-term value creation and growth, citing the increasing scarcity of sizeable and well-positioned commercial land in the city. Citaglobal said the land has been tenanted by TJM Sdn Bhd since August 2019. (The Edge)

AwanBiru Technology Bhd (AWANTEC) is disposing of an eight-storey office and retail building in Cyberjaya to tenant Puncak Hartanah Intelek Sdn Bhd for RM25m. The property disposal serves as part of the company's plan to divest non-core assets, and improve its financial position and cash flow. Proceeds from the property sale will go mostly to fund the company's working capital as well as repayment of a term loan tied to the property. (The Edge)

Lebtech Bhd (LEBTECH) has secured a RM21m contract to develop 104 units of two- storey terraced houses in Seksyen U13, Shah Alam. The construction firm's wholly owned subsidiary Lebtech Construction Sdn Bhd was awarded the contract from Brighton Land Sdn Bhd. The project commenced on Jan 28, and is expected to be completed within 18 months. (The Edge)

Scomi Energy Services Bhd's (SCOMIES) executive director Amirul Azhar Baharom has resigned from his post "to pursue personal interest" with immediate effect. Amirul's departure marks the latest exit in Scomi Energy's board exodus. Independent non-executive chairman Raja Ahmad Murad Raja Bahrin retired on Dec 16 last year, followed by independent non-executive director Ruziah Mohd Amin's resignation on Jan 1. Non-independent non-executive director Wong Mun Keong resigned on the same day as Amirul. (The Edge)

Source: PublicInvest Research - 3 Feb 2025