Previous Day Highlights

FBM KLCI ended lower on Tuesday amid ongoing market uncertainties before closing for CNY holidays. The benchmark index was down 0.40% or 6.28 pts to close at 1,552.69. Majority of sectors were negative with utilities (- 1.7%), technology (-1.1%), and construction (-0.8%) leading the losses; while gainers were seen in plantation (+1.1%), and transportation (+0.4%). Market breadth was negative with 537 losers against 372 gainers. Total volume stood at 2.18bn shares valued at RM2.02bn.

Major regional indices were closed for the CNY holidays. Meanwhile, the Nikkei 225 edged up 0.25%, to finish at 39,513.75.

Wall Street closed higher as market assesses a slew of corporate earnings. The DJIA added 0.38%, to end at 44,882.13. Nasdaq rose 0.25%, to close at 19,681.75. S&P500 rose 0.53%, to finish at 6,071.17.

News For The Day

DeepSeek Erases RM23bn in AI Proxy Market Cap on Bursa

The sell-off in AI proxy stocks on Bursa Malaysia wiped out RM23.33bn in market value across 15 companies since mid- January. Concerns over US chip export restrictions and the emergence of China’s DeepSeek AI model fuelled the decline. YTL Power saw the largest loss, while Gamuda, IJM, and Sime Darby Property also suffered. Investor sentiment remains cautious amid US policy uncertainties. – The Edge Market

MAHB to be delisted by Khazanah-EPF led consortium

Gateway Development Alliance (GDA), led by Khazanah and EPF, has secured enough shares to delist Malaysia Airports Holdings (MAHB) after an eight-month takeover process. Bursa Malaysia will suspend MAHB shares on Feb 20. The RM11-per-share offer values MAHB at RM18.4bn. Despite opposition from independent directors, GDA insists privatisation is key to long-term transformation. – The Edge Market

Datasonic bags RM104m contract extension for passport

Datasonic Group has secured a one-year contract extension worth RM104.8m from the Ministry of Home Affairs to supply passport chips to the Malaysian Immigration Department. The contract, effective from Dec 1, 2024, to Nov 30, 2025, marks the fifth extension, bringing the total contract value to RM616.7m since 2015. This follows recent contract extensions for passport and biodata page supplies, valued at RM57.2m and RM93.3m. – The Star

Salcon consortium awarded 7MW solar project in Perak

Salcon’s consortium won a contract to build a 7MW solar energy facility in Sungai Siput, Perak, under a 21-year agreement with Tenaga Nasional. Salcon’s subsidiary, Mentari Kamuning, holds 70% of the project, while Kinergy Advancement owns 30%. Expected to boost earnings from 2025 onwards, the project aligns with Salcon’s engineering and construction focus, which contributes 66% of its revenue. – The Edge Market

Eonmetall plans private placement to raise RM22m

Eonmetall Group plans a private placement of up to 30% of its shares, raising RM22.1m at 26.5 sen per share by 1Q2025. Proceeds will repay RM11.7m in borrowings and fund working capital. As of December 2024, total borrowings stood at RM129.7m. Executive director Datuk Goh Cheng Huat remains the largest shareholder with a 30.34% stake. - The Edge Market

Our Thoughts

Wall Street closed positively amid a volatile session following a mixed bag of corporate earnings from big tech companies. Sentiment has turned cautious after the Feds maintained interest rates, citing inflation remains somewhat elevated. Meanwhile, the US 10-year yield eased to 4.52%. Over in Hong Kong, the HSI inched marginally higher to stay above the 20,000 mark before closing for CNY celebrations. Many are expecting funds to re-look at Asian tech companies rendering better valuations with immense cost efficiency. The HKSE will resume trading on 3rd Feb. On the home front, the FBM KLCI continued with its downtrend or a YTD low, ahead of the CNY break as investors are concerned of the disruptions from Deepseek on the hyper-scalers’ AI investments going forward. Nonetheless, we are adamant that foreign funds will eventually look at Asia being a preferred destination due to reasonable valuations as compared to those overvalued ones on Wall Street. Thus, we can expect a U-turn in foreign funds back to the region. For today, we anticipate the index to hover within the 1,550-1,560 range.

Source: Rakuten Research - 31 Jan 2025

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