Previous Day Highlights

FBM KLCI pared its earlier gains to close lower attributed to late selling pressures. The benchmark index lost 0.25% or 4.06 pts to close at 1,619.06. Majority of sectors were negative with technology (-1.0%), utilities (-0.8%), and telecommunications (-0.7%) leading the losses; while gainers were seen in transportation (+0.3%), and construction (+0.1%). Market breadth was negative with 639 losers against 532 gainers while 513 counters were unchanged. Total volume stood at 4.58bn shares valued at RM3.73bn.

Major regional indices trended mostly higher on the US rate cut outlook, except Nikkei 225 which tumbled 2.45%, to finish at 41,190.68. HSI soared 2.59%, to end at 18,293.38. SHCOMP added 0.03%, to close at 2,971.30. STI rose 0.65%, to close at 3,497.78.

Wall Street closed broadly higher, driven by ongoing optimism from rate cut hopes. The DJIA climbed 0.62%, to end at 40,000.90. Nasdaq jumped 0.63%, to close at 18,398.45. S&P500 mounted 0.55%, to finish at 5,615.35.

News For The Day

Kimlun JV with Singapore’s Astaka to build JB apartments

Kimlun Corp is forming a joint venture company with Singapore-listed Astaka Holdings Ltd’s (AHL) indirect 50.99%- owned unit Astaka Capital SB (ACSB) to develop a residential serviced apartment project in Johor Bahru. The project is related to phase three of Arden @ One Bukit Senyum, which is slated to launch in the 4Q24, with construction expected to be completed within 48 months. The JVco has also proposed to acquire a parcel of land measuring 1.662 acres in Johor Bahru for RM61.5m or RM77 per sq. ft. to be developed for the residential serviced apartment project. -The Edge Markets

Nestcon aims to raise RM27m via private placement

Nestcon aims to raise RM27.27m through a private placement of 70.82m shares or 10% of its enlarged share base. A total of RM22m of the gross proceeds will be allocated to repaying its bank borrowings. Another RM4.58m will be used for working capital and the remaining RM685,000 will cover estimated expenses related to the proposed private placement. -The Edge Markets

Minetech bags RM4.05m contract for Banting project

Minetech Resources’ wholly-owned subsidiary, Minetech Construction SB, has secured a RM4.05m contract from VED Engineers SB. The contract is to undertake the construction and completion of road and drainage works for Banting Industrial City (Part of Phase 2D). The contract commenced on June 28, 2024 and is slated to complete in 3 months. -The Star

Tafi bags RM207m related-party transaction in Setia Alam

Tafi Industries has bagged a construction contract as well as piling and project furniture works worth a combined total of RM207.46m for a mixed-use development project that comprises a serviced apartment and a small-office, home- office block in Setia Alam, Selangor. The contract, awarded by Armani KPF2 Development SB, is expected to contribute positively to its earnings for FY24 until FY27. -The Edge Markets

RGTech to acquire 80% stake in IT firm for RM52.5m

Radiant Globaltech is acquiring an 80% stake in IT solutions provider Rymnet Solutions SB, for RM52.5m, from its CEO and Un Sze Hau. Rymnet specialises in digitalisation of HR management operations. Through the proposed acquisition, the group will be able to incorporate HR management system modules into its existing suite of solutions. The acquisition deal will be financed through a combination of cash of RM42.5m and 30.3m new shares at 33 sen per share to Un to cover the remaining RM10m. -The Edge Markets

Our Thoughts

It was a record breaking day on Wall Street as all 3 major indices experienced new highs as traders were expecting the Federal Reserve to cut rates. However, attention was focused on Trump being shot in Pennsylvania that hogged the limelight as this may have implications. Meanwhile, the US 10-year yield eased to 4.186%. Over in Hong Kong, the HSI maintained its upward trajectory and surged past the 18,000 mark as sentiment was buoyed by the brightening prospects of a rate cut in the US. Back home, the FBM KLCI dipped below the 1,620 level as selling persisted in the afternoon session. As such, we reckon the index is faced with a strong resistance at around the 1,630 level currently. Though we remain optimistic on the outlook, we believe the index may need to break this resistance decisively soon to continue with its uptrend and to avoid a prolonged consolidation mode. Hence, we expect the index to hover within the 1,615-1,625 range today. Meanwhile, the MYR has strengthened to the 4.66 level which is the highest YTD.

Source: Rakuten Research - 15 Jul 2024

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