MIDF: FBM KLCI to rebound to 1,830 by end-2019

KUALA LUMPUR: MIDF Research expects the benchmark FTSE Bursa Malaysia KLCI (FBM KLCI) to rebound to 1,830 by end-2019, supported by a recovery in corporate earnings.

Head of strategy and quantitative analytics Syed Muhammed Kifni Syed Kamaruddin said corporate earnings for 2019 are expected to grow by 5.8% as compared with 1.96% anticipated for this year.

“We also foresee that there are opportunities for investors to enter the market now, as the current composite index (CI) level is about 150 basis points lower than what we projected by end of 2019,” he told a market outlook media briefing today.

Syed Muhammed said the market price-earnings ratio valuation is also expected to improve to 16.2% from the current level of 15.8%.

With that, along with no further escalation in trade tensions between the United States and China, he said the 1,830 level target should be achievable.

However, he opined that Bursa Malaysia would be trading range-bound next year with profit-taking and performance-chasing activities taking place.

As for end-2018, he said the CI support level would be at 1,600, but it would trade higher should window dressing activities kick in.

On the ringgit, he foresees the local unit to mildly strengthen to RM4 against the US dollar by end-2019 from the current level of about RM4.18.

“This would be backed by the improvement in both crude oil and crude palm oil (CPO) prices,” he said.

He said benchmark Brent Crude was anticipated to trade higher at US$75 per barrel next year from the current level of about US$60 per barrel, following the Organisation of the Petroleum Exporting Countries agreement on a production cut, with the CPO to average at RM2,200 per tonne from the current RM1,960 per tonne.

“Subsequently, this will lead to the return of foreign funds into our markets, as we have seen outflow amounting to RM11 billion as of last week for this year,” he said.

Last year, the local equity market recorded more than RM10 billion of foreign fund inflow.

Commenting on the outlook for fund flows, head of research Mohd Redza Abdul Rahman said it would still boil down to corporate earnings.

“If the earnings are positive, share prices will follow and entice the foreign investors to come in,” he said, adding that Bursa Malaysia is still defensive compared with regional peers.

“This would help investors find shelter here amid the uncertainty,” he added.

According to MIDF Research’s statistics, the KLCI’s gains slid 6.8% between January and last Friday, while the MSCI Asia Pacific Ex-Japan Index fell 15.4% and the MSCI Emerging Markets Index retreated 16% in the same period.


‘Foreign firm closures due to business reasons’

KUALA LUMPUR: Five manufacturing companies involving foreign investors closed down during the May-September period, with investments worth RM308.7 million, said Deputy Minister of Trade and Industry Ong Kian Ming.

Subsequently, 362 local workers were laid off following the closures which were due to business decisions and not because of the transition in the government, he said.

“Other factors which led to foreign investors withdrawing their investments from Malaysia include the contraction in the global economy and market volatility resulting from the decline in demand and sales,” he told the Dewan Rakyat today.

He was answering a question from Datuk Seri Ikmal Hisham Abdul Aziz (BN–Tanah Merah) on the number of foreign investors who had withdrawn their investments from the country and the value involved.

Ong said the reason for the closures also included rising operational costs and lack of demand for products, forcing the investors to restructure their companies and business strategies, with some deciding to withdraw their overseas investments, including the ones in Malaysia.

He said Malaysia’s increasing focus on quality and high technology investments, the technological shift towards digitalisation and Industry 4.0, as well as rising labour costs had left investors, especially those involved in labour-intensive projects, unable to adjust their operations.

As such, they faced difficulties in continuing their operations while maintaining their long term profits in the country.

Ong said local workers who were laid off were offered sufficient compensation packages by the companies, which also cooperated with the Federation of Malaysian Manufacturers and other companies to rehire those about to be terminated.

The companies also collaborated with the Human Resources Development Fund (HRDF) to help the workers to participate in the appropriate skills training programmes via the HRDF Outplacement Centre.

“Under the scheme, local workers who were laid off would be equipped with additional industrial skills or the necessary qualifications to enable them to be re-employed or to be self-employed,” Ong said.


Bursa Malaysia ends at nearly 2-year low

KUALA LUMPUR: Bursa Malaysia closed trading at a nearly two-year low today with the key index slumping 1.025%, as heightened US-China trade worries battered sentiment globally, dealers said.

At 5pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) fell 17.23 points to 1,663.31 after fluctuating between 1,662.81 and 1,674.67 throughout the day.

The stock market barometer finished weaker at 1,663.03 on Jan 17 last year.

Losses in Sime Darby Plantation and CIMB dragged the composite index down by a total of 4.744 points, after falling 21 sen to RM4.48 and 13 sen to RM5.65 respectively.

On the broader market, losers hammered gainers 612 to 194, while 332 counters were unchanged, 731 untraded and 25 others suspended.

Volume increased to 2.65 billion units valued at RM1.37 billion from 1.91 billion units valued at RM1.51 billion last Friday.

A dealer said Bursa’s downtrend was in tandem with most of its Asian peers, which were still in the red since last week, amid the US stock market uncertainty coupled with mounting concerns about global growth.

“Despite better oil prices, Bursa and Asian shares were under pressure as trade tensions between Washington and Beijing continued to weigh on sentiment.

“They (investors) fear that a rise in tensions between both administrations could dampen chances of a trade deal,“ he told Bernama.

Among heavyweights, Maybank inched down half-a-sen to RM9.37, Public Bank lost 10 sen to RM24.70, Tenaga trimmed 14 sen to RM13.56, while Petronas Chemicals slipped one sen to RM9.19.

Of actives, Tatt Giap and Bumi Armada shed one sen each to half-a-sen and 15.5 sen, Prestariang slid 15 sen to 30.5 sen. Sanichi inched down half-a-sen to 13.5 sen, while MyEG depreciated nine sen to RM1.05.

The FBM Emas Syariah Index was 146.48 points weaker at 11,461.75, the FBM Ace Index fell 87.99 points to 4,596.26, and the FBM 70 erased 203.16 points to 13,319.83.

The FBM Emas Index gave up 134.04 points for 11,463.5 and the FBMT 100 Index edged down 130.47 points to 11,349.45.

Sector-wise, the Plantation Index lost 152.88 points to 6,682.23, the Industrial Products and Services Index eased 0.74 point to 168.3 and the Financial Services Index decreased 159.12 points to 17,275.91.

Main Market volume rose to 2.12 billion shares worth RM1.26 billion from 1.391 billion shares valued at RM1.392 billion last Friday.

Warrants turnover widened to 345.03 million units valued at RM81.35 million from 306.09 million units valued at RM75.48 million.

Volume on the ACE Market declined to 187.23 million shares valued at RM31.29 million compared with 215.14 million shares valued at RM39.49 million.

Consumer products and services accounted for 143.25 million shares traded on the Main Market, industrial products and services (1.3 billion), construction (55.54 million), technology (187.47 million), SPAC (15,200), financial services (23.93 million), property (74.02 million), plantations (18.96 million), REITs (2.72 million), closed/fund (24,000), energy (191.39 million), healthcare (35.14 million), telecommunication and media (23.49 million), transportation and logistics (45.61 million), and utilities (16.41 million).

The physical price of gold as at 5pm stood at RM161.69 per gramme, up RM1.17 from RM160.52 at 5pm last Friday. — Bernama


Weak sentiment continues to weigh on Bursa Malaysia

KUALA LUMPUR: Bursa Malaysia opened lower today, extending last week’s downtrend and dampened by weak buying sentiment, especially on the external front.

At 9.03 am, the key FTSE Bursa Malaysia KLCI (FBM KLCI) fell 9.31 points to 1,671.23 from Friday’s close of 1,680.54.

The index opened 5.87 points weaker at 1,674.67.

Losses in Tenaga dragged the composite index down by 3.232 points after falling 32 sen to RM13.38 with 140,400 shares changing hands.

On the broader market, decliners outnumbered advancers 141 to 54, with 127 counters unchanged, 1,547 untraded and 25 others suspended.

Volume stood at 138.49 million units valued at RM29.59 million.

Public Investment Bank Bhd said the FBM KLCI might open lower today after US stocks suffered further steep falls at the end of a turbulent week last Friday, dominated by uncertainty over the US-China trade dispute and mounting concerns about global growth.

Wall Street proved unable to hold its initial gains on Friday, as tech stocks sold off and early strength for the energy sector evaporated, with crude prices giving back some of their early gains after an agreement by the Organisation of the Petroleum Exporting Countries (OPEC) and its partners to cut output.

“The mood was not helped by remarks from White House trade adviser Peter Navarro, who said the US would push ahead and increase tariffs on Chinese imports, if Washington and Beijing cannot agree on a binding trade truce within a 90-day negotiating period.

“But European and Asian stock indices mostly ended firmer, albeit well off the day’s highs, as buyers stepped back in after some savage falls on Thursday,” the research house said in a note today.

Back home, among the heavyweights, Public Bank lost 10 sen to RM24.70, CIMB eased four sen to RM5.74, while both Maybank and Petronas Chemicals were flat at RM9.42 and RM9.20 respectively.

Among actives, Tatt Giap and Sapura Energy slipped half-a-sen each to one sen and 34.5 sen respectively, MYEG slid one sen to RM1.13, but Hubline was flat at four sen.

The FBM Emas Shariah Index eased 82.35 points to 11,525.88, the FBM 70 gave up 105.44 points for 13,417.55 and the FBM Ace Index was 15.67 points lower at 4,668.72.

The FBM Emas Index fell 66.93 points to 11,530.67 and the FBMT 100 Index declined 69.65 points to 11,410.27.

Sector-wise, the Plantation Index weakened 69.08 points at 6,766.03 and the Financial Services Index contracted 33.44 points to 17,401.59, and the Industrial Products and Services Index shed 0.14 of-a-point to 168.9.

Gold futures contracts on Bursa Malaysia Derivatives were unchanged this morning on a lack of demand.

At 9.48 am, December 2018, January 2019, February 2019 and March 2019 were unchanged at RM165.60, RM165.60, RM165.70 and RM165.80 a gramme respectively.

Volume was nil, while open interest amounted to 27 contracts.

At 9.30 am, the price of physical gold was up RM1.37 to RM161.89 per gramme. — Bernama


Ringgit to trade in positive mood next week

KUALA LUMPUR: The ringgit is expected to trade in a positive mood next week following a great week for local bonds, said Oanda Head of Trading Asia Pacific, Stephen Innes.

He said the market traded below 4.15 following the US and China 90-day truce to resolve their differences over trade.

At the recent G20 summit in Buenos Aires, both US President Donald Trump and his Chinese counterpart Xi Jinping, reached an agreement to hold off on slapping additional tariffs on each other’s goods after Jan 1, 2019, as talks continued between both countries.

“However, traders need to remember that the ringgit is directly affected by fluctuation of oil prices. Lower oil prices will affect the ringgit’s performance,“ he told Bernama.

Innes said that a weaker US dollar was expected as traders were anticipating a number of interest rate increases by the US Federal Reserve next year.

“This would cause the US dollar to weaken further amid weakening economic data and heightened market volatility,“ he said.

Meanwhile, FXTM Global Head of Currency Strategy and Market Research Jameel Ahmad said the ringgit, as well as other emerging market currencies, would require further positive trade truce developments for them to push forward.

“The ringgit had previously benefited in a similar way from the development of the trade truce,“ he said.

He added that if the financial markets panicked if the 90-day truce were broken by either side, as this would like trigger a very sudden downturn of risk appetite – a potential to encourage the ringgit to fall towards 4.20 before year-end.

“If the positive scenario unfolds, this can lead to the ringgit advancing all the way to at least RM4.10 against the US dollar,“ he said.

For the week just ended, the ringgit closed mostly mixed against the US dollar with the market sentiment moved by oil prices, the US-China trade negotiation outcome, profit-taking on the ringgit, and investor worries on global economic outlook.

On a Friday-to-Friday basis, the local note strengthened to 4.1640/1680 against the greenback from 4.1820/1870 in the previous week.

The ringgit traded mostly higher against a basket of major currencies.

It appreciated against the Singapore dollar to 3.0385/0434 from 3.0499/0546 but vis-a-vis the Japanese yen, it eased to 3.6899/6937 from 3.6843/6903.

However, the local unit improved against the British pound to 5.3116/3184 from 5.3375/3443 and strengthened against the euro to 4.7320/7373 from 4.7545/7619. — Bernama


Bursa Malaysia to continue narrow-range trading next week

KUALA LUMPUR: Bursa Malaysia will likely continue to trade within a narrow range next week, hovering between the 1,680 and 1,700 levels, mainly driven by volatility in the external market.

Rakutan Trade Sdn Bhd Head of Research Kenny Yee said major factors emanating from the US-China 90-day truce to resolve their differences over trade would have an impact on the market.

At the recent G20 summit in Buenos Aires, both US President Donald Trump and his Chinese counterpart Xi Jinping, reached an agreement to hold off on slapping additional tariffs on each other’s goods after Jan 1, 2019, as talks continued between both countries.

Trump decided not to impose further tariffs on US$200 billion (RM833 billion) of Chinese goods, while Xi agreed to buy an unspecified, but “very substantial” amount of American agricultural, energy, industrial and other products.

“However, the outcome of G20 will only play a small part. The world market will be closely watching the US Federal Reserve’s decision on its rate hike but as of now, the US economy is weakening, hence a potential cause to pause the hike.

“For the US stock market, we may see more money flowing out from the US equities … some may flow into Asia but most of them will be channelled into the bond market,“ he told Bernama.

Yee expressed hope that the barometer index on Bursa Malaysia could close the year at the 1,800-level but he doubt it would happen, especially with the downgrading seen on the earnings after the third quarter of 2018.

“We are putting around the 1,780-level for the KLCI index … the only positive thing on the local bourse is the addition of the two new constituents, namely AMMB and Top Glove, replacing TM and KLCCP.

“These two stocks should provide more stability (instead of TM and KLCCP),“ he said, adding that AMMB was one of the stocks worth buying ahead of the year-end.

For the week just ended, Bursa Malaysia traded mostly lower on external factors, including investors volatility optimism on the ongoing US-China trade deal, as well as the announcement of a slower interest rate increase by the US Federal Reserve.

The local stock market was also influenced by the performances on Wall Street and regional markets, as well as crude oil prices.

On a Friday-to-Friday basis, the benchmark FTSE Bursa Malaysia KLCI (FBM KLCI) settled 0.68 of-a-point better at 1,680.54.

The FBM Emas Index fell 6.80 points to 11,597.54, the FBMT100 Index slipped 0.13 of-a-point to 11,479.92 and the FBM Emas Syariah Index eased 25.21 points to 11,608.23.

The FBM 70 lost 18.92 points to 13,522.99 and the FBM Ace was 80.04 points lower at 4,684.39.

Sector-wise, the Finance Index bucked the trend, rising 65.82 points to 17,435.04, but the Industrial Products and Services Index edged down 1.39 points to 169.04, while the Plantation Index was 18.16 points weaker at 6,835.11.

Comparing Friday-to-Friday, the weekly turnover depreciated to 10.81 billion units valued at RM9.4 billion from10.84 billion units worth RM13.13 billion.

Main Market volume was at 7.72 billion units worth RM8.58 billion versus 7.72 billion units valued at RM12.47 billion.

Warrants turnover rose to 1.87 billion units valued at RM462.77 million from1.83 billion units worth RM414.34 million.

The ACE Market volume was lower at 990.56 million shares worth RM211.72 million compared with 1.25 billion shares valued at RM257.08 million. — Bernama


Shares on Bursa Malaysia easier at opening on mild selling

KUALA LUMPUR: Shares on Bursa Malaysia were easier at Friday’s opening on mild selling, as the arrest of a senior Chinese executive at tech giant Huawei, escalated fears that it could impact the progress of the US-China trade discussions, dealers said.

At 9.03 am, the key FTSE Bursa Malaysia KLCI (FBM KLCI) eased 1.04 points to 1,682.30 from Thursday’s close of 1,683.34.

The index opened 1.97 weaker at 1,681.37.

On the broader market, gainers were slightly higher than losers at 91 to 77, with 113 counters unchanged, 1,588 untraded and 24 others suspended.

Volume stood at 157.47 million units valued at RM25.93 million.

Huawei chief financial officer Meng Wanzhou was arrested in Canada and faces extradition to the US for purported violations of sanctions on Iran.

Stephen Innes, Head of Trading at Oanda Singapore said the Huawei headline could not have come at a worse time, with the market reeling as confusion reigned over the Group of 20 (G20) fallout.

“But, when you laminate trade war issues with observed dovish shifts from major central banks, it merely adds a whole new level of unwanted confusion entering year-end,” he said.

Meanwhile, the Organisation of the Petroleum Exporting Countries, which ended talks yesterday without a deal to cut oil production (for the first time in almost five years), sent oil prices lower by 0.60 per cent to US$59.70 per barrel.

Among the heavyweights, Maybank was flat at RM9.44, Public Bank declined 14 sen RM24.74, Tenaga eased two sen to Rm13.74, while Petronas Chemicals was seven sen weaker at RM9.20.

Among other actives, Tatt Giap, Perak Transit and MyEG rose one sen each to 2.5 sen, 27 sen and RM1.16 respectively, while Hubline was flat at four sen.

The FBM Emas Shariah Index gained 1.06 points to 11,616.32, the FBM 70 added 32.99 points at 13,497.02 and the FBM Ace Index was 12.67 points stronger at 4,742.47.

The FBM Emas Index appreciated 3.61 points to 11,606.91 and the FBMT 100 Index improved 1.09 points to 11,484.01.

Sector-wise, the Plantation Index advanced 22.99 points to 6,860.77 and the Financial Services Index edged up 18.99 points to 17,470.66, but, the Industrial Products and Services Index was 0.60 of-a-point weaker at 168.80.

Gold futures contracts on Bursa Malaysia Derivatives were unchanged this morning on a lack of demand.

At 9.40 am, December 2018 and January 2019 were each pegged at RM165.60 a gramme, February 2019 stood at RM165.70 a gramme, while March 2019 was unchanged at RM165.80 a gramme.

Volume was nil, while open interest amounted to 27 contracts.

At 9.30 am, the price of physical gold was up 49 sen to RM160.49 per gramme. — Bernama


Petronas conducting feasibility study on energy supply in Silica Valley

KUALA LUMPUR: Petroliam Nasional Bhd (Petronas) is undertaking a feasibility study for the development of an energy supply and related infrastructure in the Terengganu Silica Valley in Marang.

President and CEO Tan Sri Wan Zulkiflee Wan Ariffin said the study, conducted together with state-owned company Terengganu Inc, would involve technical and commercial assessment to develop natural gas supply, power generation, supply of industrial gases and other related gas supply in the Silica Valley.

“We expect to complete the study within 18 months,“ he told reporters after witnessing the signing of a memorandum of understanding (MoU) between Petronas and Terengganu Inc today.

The MoU was signed by Petronas vice-president (Malaysia Petroleum Management) Muhammad Zamri Jusoh and Terengganu Inc Director Datuk A Rahman Yahya.

Terengganu Mentri Besar Dr Ahmad Shamsuri Mokhtar, who witnessed the ceremony, said the MoU also included a proposal to develop 32km of gas transmission and distribution pipeline to the project to allow supply of gas through the peninsular gas utilisation network from existing gas supply systems.

He said the Silica Valley development would be partly funded by the state government, but declined to disclose the amount, saying that the proposal was still at the preliminary stage.

With a gross development value of RM13 billion, the Silica Valley will be developed in two phases – 470ha in the first phase and 3,520ha in the second phase.

The project is scheduled for completion within 10 to 15 years and create 7,200 jobs.

On the outcome of the Organisation of the Petroleum Exporting Countries’ (Opec) meeting today, Wan Zulkiflee said Petronas’ plans were based on the continuance of the production cut.

“In the past, we have been complying with this 20,000 barrels production cut per day and we just have to see on the outcome of this meeting,“ he said.

The Opec meeting, scheduled to be held in Vienna today with the aim of reaching an accord over production levels for the next six months.

The cartel will then meet with allied non-Opec partners tomorrow, with markets widely-expecting the energy alliance to announce steep output reductions of around 1.2 million to 1.4 million barrels per day starting January.

Petronas had previously reduced its oil production by 20,000 barrels per day in line with efforts by Opec and its allies to solve the global supply glut.


Shares on Bursa Malaysia remain on downtrend

KUALA LUMPUR: Shares on Bursa Malaysia remained on a downtrend today and in line with global peers, dealers said.

At 9.04am, the key FTSE Bursa Malaysia KLCI (FBM KLCI) fell 4.56 points to 1,683.71 from Wednesday’s close of 1,688.27.

The index opened 4.92 weaker at 1,683.35.

On the broader market, losers were slightly higher than gainers at 100 to 60, with 119 counters unchanged, 1,590 untraded and 23 others suspended.

Volume stood at 115.82 million units valued at RM34.17 million.

A dealer said the local bourse is expected to weaken further as investors focus on the Organisation of the Petroleum Exporting Countries meeting, scheduled for today.

“Among the topics to be highlighted is the crude oil output policy, and this will provide some clues to global markets, including Malaysia, since we are an oil producing country,“ he said.

The benchmark Brent crude fell 0.84% to US$61.56 (RM6.50) per barrel.

Among other actives, Tatt Giap rose half-a-sen to 1.5 sen, Astro increased nine sen to RM1.38, Techbond added 2.5 sen to 88.5 sen and Bumi Armada was half-a-sen better at 16 sen.

The FBM Emas Syariah Index declined 32.87 points to 11,653.01, the FBM 70 dropped 16.28 points at 13,549.76 and FBM Ace Index was 0.94 of-a-point weaker at 4,742.88.

The FBM Emas Index eased 27.58 points to 11,626.13 and the FBMT 100 Index depreciated 27.12 points to 11,501.82.

Sector-wise, the Plantation Index slid 79.52 points to 6,825.80 and the Financial Services Index slipped 5.08 points to 17,452.73.But, the Industrial Products and Services Index was 0.79 of-a-point better at 170.66.

The physical price of gold as at 9.30am stood at RM160.47 per gramme, up 84 sen from RM159.63 at 5pm yesterday. — Bernama