Review & Outlook

The local market extended profit-taking correction Thursday, along with heavy falls in the region following the sharp overnight Wall Street drop as weaker-than-expected US tech earnings dampened sentiment. The FBM KLCI slipped another 5.96 points to close at 1,615.18, off an early low of 1,610.58 and high of 1,618, as losers swarmed gainers 954 to 255 on total trade of 4.55bn shares worth RM3.11bn.

The recent profit-taking correction should prevail as investors closely monitor earnings from more key US technology names and revise their expectations ahead of the weekend. Immediate index supports remain at 1,614, 1,606 and 1,582, the respective 30-day, 50-day and 100-day moving average levels, while immediate resistance will be the recent high of 1,638, with 1,640 and 1,660 as tougher upside hurdles.

Any further weakness on Axiata towards the 23.6%FR (RM2.36) would aggravate oversold conditions and spark technical rebound ahead, with immediate upside hurdles seen at the 50%FR (RM2.60) and 61.8%FR (RM2.70), and strong support from the 31/10/23 low (RM2.12). CelcomDigi will need to overcome key resistance from the 61.8%FR (RM3.88) and 76.4%FR (RM4.08) to enhance upside momentum, with major hurdle seen from the 30/5/23 high (RM4.42), and key chart supports at the lower Bollinger band (RM3.49) and 23.6%FR (RM3.34).

News Bites

• Malaysia saw its leading index grow 3.8% YoY to 114.2 points in May 2024, primarily supported by a sturdy gain in the Bursa Malaysia Industrial Index, followed by real imports of other basic precious and other nonferrous metals.

• Sarawak Consolidated Industries Bhd has secured a RM162mn contract for an engineering, procurement, construction, and commissioning project, which will span 23 months in Mualim, Perak.

• JAKS Resources Bhd's subsidiary has entered into a MoU with TDM Bhd's subsidiary to bid for the fifth Large Scale Solar programme.

• Ahmad Zaki Resources Bhd's wholly-owned subsidiary has been awarded a RM151.99mn contract to design and construct the Port Dickson Specialist Hospital in Negeri Sembilan.

• Iqzan Holdings Bhd is set to be delisted from Bursa Malaysia next Tuesday, following the regulator's rejection of the company's appeal for an additional extension to submit its regularisation plan.

• Excluding all exceptional items, Nestlé (Malaysia) Berhad's 2QFY24 core net profit declined by 56.1% YoY to RM80.1mn, on the back of a 13.0% drop in revenue to RM1.5bn.

• IGB Real Estate Investment Trust's net property income for the 2Q24 rose 6.5% to RM109.48mn from RM102.79mn a year ago, due to higher rental income.

• IGB Commercial Real Estate Investment Trust's net property income rose 10.8% to RM34.45mn in the 2Q24 on higher rental income.

• KIP Real Estate Investment Trust's net property income surged 62.8% to RM26.43mn for the 4QFY24, thanks to strong gains from retail properties in Peninsular Malaysia's northern and central regions.

• UOA REIT saw its net rental income fall 22.06% to RM16.48mn in its 2QFY24, dragged by higher property operating expenses.

• ViTrox Corp Bhd's 2QFY24 net profit fell 25.4% YoY to RM28.1mn, dragged by its ongoing research and development investment as well as unfavourable foreign exchange losses.

• The People's Bank of China unexpectedly lowered the rate on its oneyear policy loans by 20 basis points to 2.3%.

• China will allocate CNY300bn (US$41.4bn) in ultra-long treasury bonds to support a programme of equipment upgrades and consumer goods trade-ins.

• The US economy grew at a faster than expected annualised rate of 2.8% in 2Q24 amid solid gains in consumer spending and business investment.

Source: TA Research - 26 Jul 2024