Malaysian market wrap: Shares rise for sixth session, Tenaga Nasional lead gains

Malaysian market wrap: Shares rise for sixth session, Tenaga Nasional lead gains

KUALA LUMPUR (NewsRise) — Malaysian shares rose for the sixth straight session on Monday, tracking a rally in most Asian stock markets, as gains in select index stocks lifted sentiment and helped the market to rebound from an intra-day fall after a weaker-than-expected industrial output growth in August.

     Earlier Monday, the government said industrial production rose a lower-than-expected 3% in August from a year earlier, the slowest pace of expansion since July 2014, dragged down by 3.4% annual contraction in mining output. The August factory output growth, trailed market expectation of a 4.1% rise and decelerated sharply from July’s 6.1% annual gain.

     Shares of Tenaga Nasional, Hong Leong Bank and Telekom Malaysia rallied on value buying by funds, while SapuraKencana Petroleum fell after an 18% gain last week.

     The nation’s benchmark FTSE Bursa Malaysia KLCI ended 0.19% higher at 1709.86 points. The index, which has gained 4.77% in the last five sessions, had risen as much as 0.75% at opening on positive global cues.

     15 of 30 constituents in the index ended higher, while overall advancing issues outnumbered declining ones 430 to 404, and 1,018 closed unchanged.

     The ringgit also closed nearly unchanged at 4.1360 to dollar against 4.1350 on Friday. The currency had its best weekly percentage gain of 6.5% in almost 17 years last week on expectations of a delay in rate hike by the Federal Reserve and higher oil prices. The currency has fallen 18.3% so far in 2015.

     A recent statement from the central bank on the debt-ridden state-owned investment fund 1 Malaysia Development Bhd, or 1MDB weighed on the ringgit. Late Friday, the Bank Negara Malaysia said it has revoked three approvals given to 1MDB for foreign investments totalling $1.83 billion. Bank Negara Malaysia has also instructed the fund, which is currently being probed by multiple agencies, to repatriate the sum as it was found to have violated disclosure rules.

     After selling for two straight weeks, foreign investors bought 783.4 million ringgit ($187.7) in the previous week, the highest since May 2014, according to MIDF Research. Foreign investors have withdrawn 17.6 billion ringgit so far in 2015.

     “The fairly open nature of the Malaysian economy will mean that equities in the short term will remain sensitive to global developments and at the mercy of foreign flows,” said Yee Huap Low, Head of Research at Hong Leong Investment Bank

     As per MIDF Research, foreign investors were aggregate buyers in other major South-East Asian markets, with net inflows of $161.8 million in Indonesia and $143.9 million in Thailand. The Philippine market witnessed a minor outflow of $12.3 million.

     “We have definitely witnessed an improvement in domestic sentiment on the back of positive global cues and rebound in oil prices. In the next six months, in addition to oil prices, the stability of the ringgit and evolving global growth outlook will be critical for the markets,” Yee said.

     Other Southeast Asian stock markets closed higher, led by 1.12% rally Singapore’s Strait Times Index. Thailand’s SET Index rose 0.08%. Philippine’s PSE Composite Index rose 0.16% and Indonesia’s Jakarta Stock Exchange Composite Index rose 0.9%.

     Broader Asian stocks rose. Japan’s Nikkei 225 and Hong Kong’s Hang Seng rose 1.64% and 1.21%. South Korea’s Kospi gained 0.1% while Taiwan’s TWSE climbed 1.51%. China’ Shanghai Composite Index rose by 3.29%.

     “Profit-taking activities are expected to emerge following the strong rally in the KLCI last week. Indeed, the benchmark index has ventured into our ‘Sell on Strength’ range, thus triggering our strategy of selling into a market rally. Technically speaking, we expect the KLCI to trade at between 1,670 and 1,730 this week,” says Kenanga Research in a note.

     Tenaga Nasional rose 3.04% to 12.88 ringgit extending its over 3% rally last week. Analysts have been positive on the stock following the introduction of the New Enhanced Dispatch Arrangement.

     Hong Leong Financial Group rose 1.08% to 14.96 ringgit. AllianceDBS Research reiterated a ‘buy’ rating on the stock citing potential privatization and corporate streamlining within the group as near-term catalysts. It has a 12-month target of 18.10 ringgit on the stock.

     Hong Leong Bank rose 1.62% to 13.78 ringgit.

     RHB Capital extended its last week’s over 5% rally, to climb 0.32% to 6.22 ringgit. CIMB Equities research said that RHB Capital had the highest potential market upside among the large cap stocks. It expects the group to clock strong earnings growth in the next three to five years. It has a target of 13.12 ringgit for 2018 on the stock, translating into a 110% upside from current levels.

     However, Sapurakencana Petroleum, the country’s largest oil and gas services provider, and conglomerate, Genting, fell on profit taking.

     Sapurakencana Petroleum and Genting fell 1.82% to 2.16 ringgit and 0.77% to 7.75 ringgit. The stocks had rallied by 18% and 7% last week respectively.

     The planation index rose by 0.37%. Palm oil inventory rose to record 2.63 million tons in September, data from Malaysian Palm Oil Board show. The mammoth stockpile will likely stymie a recent rally in palm futures as production remains robust amid feeble growth in demand for palm oil that is widely used for cooking to cosmetics, analysts said.

     IOI Corporation fell 0.9% to 4.4 ringgit. Kuala Lumpur Kepong rose 0.35% to 22.68 ringgit.  

Malaysian market wrap: Shares rise for sixth session, Tenaga Nasional lead gains