Review & Outlook

Profit-taking interest returned to drag stocks lower on Wednesday, matching regional falls on weaker economic data and as selling pressured stocks down from three-year highs. The FBM KLCI fell 8.54 points to settle at 1,621.14, off an opening high of 1,631.31 and low of 1,619.71, as losers beat gainers 773 to 341 on slower trade totaling 4.39bn shares worth RM2.8bn.

The local market should extend profit-taking correction following the sharp overnight Wall Street drop, pending more significant domestic leads to lift stocks from the recent consolidation. Immediate index resistance remains at the recent high of 1,638, with 1,640 and 1,660 as tougher upside hurdles, while immediate supports are at 1,614, 1,606 and 1,581, the respectively rising 30-day, 50-day and 100-day moving average levels.

Further weakness on Hibiscus should attract buyers looking for rebound upside, with a breakout above the 50-day ma (RM2.43) to aim for the 61.8%FR (RM2.50) and 76.4%FR (RM2.65) ahead, while key retracement supports at the 38.2%FR (RM2.25) and 23.6%FR (RM2.09) cushion downside. Velesto will be attractive to bargain on any dips towards key chart supports at the 61.8%FR (22sen) and 50%FR (19sen), while oversold rebound should be capped by the 200-day ma (26sen) and 29sen.

News Bites

• Malaysia's headline inflation remained steady at 2.0% YoY in June, driven by higher prices at restaurants, costlier utilities and food, though the rate came in lower than expected 2.2% in a Bloomberg survey.

• The Malaysia Semiconductor Industry Association targets semiconductor exports to grow at a CAGR of 7.6% to reach RM1.2tn by 2030.

• AME Elite Consortium Bhd is selling four industrial properties in Johor to its 49.62%-owned unit AME Real Estate Investment Trust for RM119.5mn.

• AirAsia X Bhd reported a 42% increase in passenger traffic to 880,265 in the 2Q24 from 621,984 in 2Q23, driven by peak spring travel seasons and the Eid holiday.

• Nationgate Holdings Bhd plans to issue 207.39mn new shares to raise RM429.3mn at a price nearly six times its initial public offering of 38sen per share, achieved just 19 months ago.

• MN Holdings Bhd has secured a contract worth RM136.24mn to undertake power landing station works for a data centre service provider in southern Malaysia.

• SC Estate Builder Bhd is forming a consortium to bid for projects with a total capacity of 2,000 megawatts under the fifth large-scale solar programme.

• UEM Sunrise Bhd's disposal of its 80.4% stake in South Africa's RocUnion Proprietary Ltd has fallen through once more, as the buyer, Azishe Properties Proprietary Ltd, failed to fulfil its payment obligations.

• Axteria Group Bhd, formerly known as Acoustech Bhd, has scrapped plans to jointly undertake a mixed development project with Alpha Astral Properties Sdn Bhd on land measuring 83,037 square meters in Johor Bahru.

• CapitaLand Malaysia Trust posted a 15.2% YoY jump to RM65.47 in its 2Q24 net property income due to most of the malls within its portfolio recording higher revenue.

• British American Tobacco (Malaysia) Bhd reported a 23.7% drop to RM36.28mn in its 2Q24 net profit due to increased investments in growing its vaping brand, Vuse, in Malaysia.

• United Plantations Bhd's net profit rose 17% YoY to RM185.94mn in the 2Q24 driven by higher profits from its plantation and refinery segments.

• Gadang Holdings Bhd's net loss narrowed to RM9.37mn in 4Q24, compared to RM27.7mn a year ago, thanks to increased revenue from its construction division.

• A panel at the Japanese labour ministry has decided to raise the national average minimum wage by about 5% to ¥1,054 (US$6.85) per hour this fiscal year.

• Sales of new US homes unexpectedly declined by 0.6% to a 617,000 annual pace in June as the mix of stubbornly high mortgage rates and prices deterred prospective buyers.

Source: TA Research - 25 Jul 2024