FBM KLCI slips at mid-day break, but hovers above 1,590-level

KUALA LUMPUR (April 9): The FBM KLCI slipped into negative territory on Monday, in line with the waning sentiment at key regional markets, following a drop in US jobs growth that was reported last week.

Among the better performers on Bursa Malaysia in the morning session was newly-listed EITA Resources Bhd.

The FBM KLCI lost 4.66 points to 1,594.21 at 12.30pm.

Market breadth was weaker with 378 losers and 185 gainers, while 264 counters traded unchanged. Volume was 578.5 million shares valued at RM420.14 million.

The ringgit weakened 0.29% to 3,0728 versus the US dollar; crude palm oil futures for the third month delivery rose M13 per tonne to RM3,590, crude oil fell US$1.19 per barrel to US$101.12 while gold added US$2.05 an ounce to US$1,638.47.

Asian shares fell on Monday as a sharp slowdown in U.S. jobs growth raised concerns about the strength of the world's largest economy, prompting investors to curb risk exposure ahead of more U.S. data and earnings as well as figures from China this week, according to Reuters.

BIMB Securities Research in a note Monday said it would be a stop start scenario for equities this week following a weaker than expected job data for March in the US.

Therefore, investors and traders alike will reassess their risk/reward propositions before making more commitments, it said.

As of now, the lack of fresh catalysts will be the main excuse as well as the resurrection of Eurozone’s debt situation to be road bumps ahead for equity markets.

Then again, if both the US and China are to lean towards monetary easing, these may set the markets abuzz again.

For now, we can expect loads of fence sitters.

“Locally, the FBM KLCI failed to breach the 1,600 mark despite adding another 5 points to end the week at almost 1,599.

“For now, the lack of direction with some regional markets closed, we would expect a lacklustre market today with the immediate support seen at 1,590,” it said.

ON Bursa Malaysia, BAT fell 74 sen to RM54.72, Petronas Dagangan 30 sen to RM18.54, BLD PLANTATION []s fell 19 sen to RM9.21, KLK down 14 sen to RM24.50, GAB and Public Bank lost 12 sen each to RM12.96 and RM13.68, Chin Teck lost nine sen to RM9.06 while TDM was down eight sen to RM4.87.

Naim Indah Corp was the most actively traded counter with 81.28 million shares done. The stock fell three sen to 54 sen.

Other actives included EITA that rose 10.5 sen to 86.5 sen wth 30 millin shares traded.

Other actively traded stocks included DVM, Tiger Synergy, Time, SuperComNet, Metronic, Karambunai and Focus.

Gainers included Aeon, SMPC, KLuang, Dutch Lady, Eita, Hartalega, Nationwide, Parkson, Johore Tin and Nestle.



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KLCI down on weaker global economic data

KUALA LUMPUR (April 9) : Malaysian stocks fell on Monday morning in tandem with Asian market as less-optimistic economic data from the US, and anticipation of more updates from China weakened sentiment.

Analyst said the FBM KLCI is exhibiting weaker technical dynamics, despite gains last week. This could point to a decline in the index this week, they said.

“A market pullback may be in the horizon, with the FBM KLCI possibly making its way towards the first two support levels of 1,580 and 1,555, respectively, “ HwangDBS Vickers Research Sdn Bhd wrote in a note.

At 10.01am, the FBM KLCI fell 7.07 points to 1,591.8. Across the exchange, some 268 million shares worth RM148 million were traded, leading to 115 gainers versus 235 decliners.

Top gainers DUTCH LADY MILK INDUSTRIES BHD [] added 68 sen to RM36.48 while newly-listed EITA Resources Bhd rose 11.5 sen to RM87.5 sen.

Decliners BRITISH AMERICAN TOBACCO (M) [] Bhd fell 74 sen to RM54.72 while KUALA LUMPUR KEPONG BHD [] lost 28 sen to RM24.36.

Most active was Naim Indah Corp Bhd which declined two sen to 55 sen with some 63 million shares done

Among Asian equity benchmarks, Japan’s Nikkei 225 fell 1.51% to 9,541.71 points while South Korea’s Kospi declined 1.45% to 1,999.59.

The Hong Kong and Australian bourses are closed on Monday for the Good Friday and Easter holiday season.



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EITA debuts on Bursa with 22% premium

KUALA LUMPUR (April 9) : EITA Resources Bhd rose as much as 22% on Monday early trade during the elevator system provider’s debut on Bursa Malaysia.

The stock added 17 sen to an intraday high of 93 sen before trading lower at 88.5 sen with some 19 milllon shares done as at 9.17am. EITA was among the top gainers and most-actively traded entites across the exchange.

In a note, RHB Research Institute Sdn Bhd said it expects EITA to register an earnings compound annual growth rate of 14.4% between FY12 and FY14, helped by its new product development and higher demand for elevator systems.

“EITA’s dividend policy is to pay out at least 30% of its annual earnings. Therefore, we have forecast FY12 to FY14 annual net dividend per share of 3.6 sen and 4.4 sen. This translates to net yield of 4.3% to 5.3% based on our estimated fair value,” said RHB which has a target price of 83 sen for EITA shares.



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Stocks to watch Hartalega, Ingress Corp, EITA, and oil gas-related

KUALA LUMPUR (April 7): The FBM KLCI could experience some pullback in the week beginning April 9, as the rally over the past two weeks may not be sustainable given overriding external factors.

World stock markets look poised to fall early next week and safe-haven government debt prices could rally after U.S. employment figures fell short of expectations on Friday, according to Reuters.

U.S. stock futures fell more than 1% and Treasuries prices rallied after U.S. payrolls grew by 120,000 in March, far below the expected gain of 203,000 jobs, it said.

MIDF Research head of equity Syed Muhammed Kifni said that although the FBM KLCI recorded a fresh all-time high of 1,609.33 points last week, the joy was short-lived as the local market was not spared by the global market sell-off.

He said the pullback in global risk assets was triggered by the release of the minutes of recent US Fed meeting, which were interpreted by many as the central bank signaling its hesitation on launching a fresh round of monetary stimulus as the economy improves.

“Additionally, the poor Spanish government bond auction only added fuel to proverbial fire.

“We view the pullback as a clear manifestation that the recent market rally was underpinned mainly by liquidity, rather than valuations,” he said

Syed Muhammad said that nonetheless the streak of net foreign buying of Bursa-listed shares continued unbroken this past week.

Bursa data shows that foreign investors had been net buyers for 35 consecutive trading days until last Thursday, he said.

“We thus see no reason to not to expect a continuation of the streak this week. Hence the underlying market sentiment should remain healthy so long as the liquidity flow into the market remains positive and we are confident that the FBM KLCI will regain the 1,600s level perhaps towards the later part of this week.

“Moreover, our external trade as well as industrial production figures due for release this week might potentially be key market movers. The consensus expectations are pointing towards all-around sequential improvements in the numbers,” he said.

Syed Muhammed said the immediate resistance and support levels for FBM KLCI were pegged at 1,610 points and 1,590 points respectively.

Meanwhile, Affin Investment Bank Bhd vice president and head of retail research Dr Nazri Khan said the FBM KLCI was now ripe for a pullback towards a lower sideways range of 1580-1600 level.

“We reckon the equity optimism will take a mild negative turn following a surprised absence of USA stimulus and Spanish revived fiscal concerns with the bond yields climbing to their highest level in five month (Spanish 10-Year bond rose to 5.8%).

“This has stoked concerns regarding the European debt crisis, boosted safe-haven appeal of the USA dollar and weighed on local risk-taking sentiment,” he said.

Among the stocks that could be in focus are HARTALEGA HOLDINGS BHD [], INGRESS CORPORATION BHD [], EITA Reources Bhd, and oil gas-related counters.

Hartalega is setting up a RM1.5 billion“next generation integrated glove manufacturing complex” (NGC) comprising 70 new high tech production lines.

The company said last Friday that its wholly owned subsidiary Hartalega NGC Sdn Bhd that was incorporated on March 29 is the designated corporate vehicle for the setting up of the NGC project, that is mainly involved in the production of rubber gloves to cater to fast rising global demand.

Ingress Corp Bhd will establish a switching station for TENAGA NASIONAL BHD [] (Tenaga) in a deal worth RM26.6 million. The 275-kilovolt station will be set up at Pantai Remis, Selangor.

In a filing to Bursa Malaysia Securities last Friday, Ingress said Tenaga had issued a letter of intent for the project to a joint venture between two subsidiaries of Ingress, namely, Multi Discovery Sdn Bhd and Ramusa Engineering Sdn Bhd.

Elevator manufacturer and distributor of electrical and electronics equipment EITA Resources Bhd, will be listed on Monday on the Main Board of Bursa Malaysia.

The group’s IPO entails a public issue of 23 million new ordinary shares and an offer for sale of 17 million ordinary shares, at an IPO price of RM0.76 per share.

Of the 23 million new shares, 6.5 million were allocated for public balloting and 3.5 million shares for eligible directors, employees and business associates of the Group.

Oil and gas stocks could attract some investor interest after RHB Research Institute Sdn Bhd on April 6 said it has an Overweight rating on the oil and gas sector and said it was positive on the sector following Petroliam Nasional Bhd’s (Petronas) statement on April 5 that the proposed Refinery and Petrochemical Integrated Development (RAPID) project, to be located in Pengerang, Johor, was progressing as scheduled.

The research house said on Friday that the statement was the closest indication yet that the RAPID would proceed as planned.



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