Showing posts with label Stock. Show all posts
Showing posts with label Stock. Show all posts

January 26, 2022

US stock indices end lower again. Investors await Federal Reserve's decision

 The most important day of the month has come. Today, the US Federal Reserve will announce the outcome of the first 2-day meeting in 2022. The question is whether the regulator will raise the benchmark rate already in January or stick to the plan. Speaking of the plan, it means continuing to reduce monthly asset purchases. Many experts have recently said they expect at least 3 or 4 rate hikes by the Federal Reserve this year. It also became known that President Joseph Biden himself had asked Chairman Powell to raise the interest rate by 0.5% in January. So, any outcome is possible today. If the US central bank announces a rate hike today, this decision may provide support for the greenback and exert pressure on risk assets such as cryptocurrencies and stock indices. Meanwhile, the US equity market is still bearish, in line with our expectations. The question is whether this will be a deep and prolonged fall. After all, the Federal Reserve has not raised the interest rate even once yet or abandoned the quantitative easing program. Moreover, the main US stock indices showed just a modest decline to ring the alarm. However, if these two events are connected, the NASDAQ, Dow Jones, and S&P 500 will continue making losses.


Today, a lot will depend on the Fed press conference. As we know, Jerome Powell said that the current rise in inflation could be referred to as transitory no more. He spoke about it in the US Senate and emphasized that the regulator would do whatever it takes to take growing prices under control. After all, the most vulnerable groups of the population had been hit the hardest of all due to accelerating inflation. Nevertheless, some experts suggested that the Federal Reserve had resorted to action a little too late, and the abandonment of the QE program and a few rate hikes would not be sufficient enough to curb inflation. The regulator has reduced asset purchases by $45 billion a month so far, and consumer prices are still on the rise. Above all else, a new wave of the COVID-19 pandemic is now raging around the world. Therefore, it is unlikely that supply chain issues have been resolved, and this is the primary reason why prices are growing worldwide. So, although the Federal Reserve is planning to tighten its monetary policy this year, it does not mean that inflation will plunge to around 2%.



Goldman Sachs and Wall Street Journal make their predications on Fed meetings results

 In the last few weeks or maybe even months, analysts have been widely discussing the possibility of the monetary policy tightening by the Fed. There has already been lots of news and speculation about this meeting. The results of the meeting will be announced today. Investors expect the Fed to shrink the QE program by at least another $ 30 billion per month or more. Notably, if the regulator significantly cuts bond purchases today, the US dollar will soar. The equity market as well as the crypto market, on the contrary, will sink. Meanwhile, analysts at the Wall Street Journal believe that the Fed is going to raise rates to curb rising inflation. They also stress that the current conditions are rather unusual, so it is very difficult to predict the consequences of all changes in monetary policy in 2022. Apart from that, they are sure that today Jerome Powell may provide hints about rate hikes at the meeting in March. "Declining labor market slack has made Fed officials more sensitive to upside inflation risks and less sensitive to downside growth risks. We continue to see hikes in March, June, and September, and have now added a hike in December for a total of four in 2022," The Wall Street firm's chief economist, Jan Hatzius, said.


Goldman Sachs expects the Fed to raise rates four times this year, one more than previously forecast amid rising inflation and a tightening job market. "We continue to see hikes in March, June, and September, and have now added a hike in December for a total of four in 2022," the bank pointed out. The regulator may also start unloading its balance sheet, starting from July this year by $100 billion monthly. "Our baseline forecast calls for four hikes in March, June, September, and December. But we see a risk that the [Federal Open Market Committee] will want to take some tightening action at every meeting until the inflation picture changes," Goldman economist David Mericle said. Jerome Powell does not make decisions alone. 18 members of the committee should vote "for" or "against" monetary policy tightening. In January, the majority of the committee's members spoke in favor of an early increase in the key rate. So, maybe today the FOMC may announce the key rate hike. Mericle also believes that the problem with supply chain disruptions has only worsened this winter due to Omicron. Thus, inflation is unlikely to slow down as the Fed previously expected. Energy prices continue to rise, pushing up the prices of many goods and services around the world. The probability of 4 rate hikes this year amounts to 85%, while for the 5 rate hike it totals 60%. Economists also forecast a reduction in the Fed's balance sheet in the next 2-2.5 years. The Fed may cut its balance sheet to $6 trillion from $9 trillion.



Like SeeSaw, the Global Market Returns to Negative Area

 Global stock markets saw all major Wall Street stock indices close lower in a less turbulent trading session while oil prices soared 2% as the geopolitical crisis and the Federal Reserve (Fed) meeting on Wednesday continued to be the main focus of investors.


The Dow Jones Avarage average index fell 0.19%, the S&P 500 lost 1.22%and the Nasdaq Composite was down 2.28%.


The decline marked a loss for 3 consecutive weeks as S&P continued in correctional territory. For the record, if the bellwether index closes 10% or less below the record high reached on January 3 at 9.2%, it will enter corrective territory.


The MSCI global equities index, which tracks a total of 45 stocks from other countries, was down 0.99%, which also saw its biggest decline since the Covid-19 pandemic struck.


Meanwhile, investors ’focus continues to be on the Fed meeting which will update its policy plan as well as it is expected to release the expected timeline of its rate hike and balance sheet depreciation plan.



That string, the bond market saw the 10 -year yield of the United States (US) up 5 basis points at 1.7814%.


In addition, the tension of the Russia-Ukraine crisis has also affected investor sentiment and caused concerns over the possibility of limited oil supply has further boosted the commodity by 2%.


As a result, Brent oil futures rose $ 1.93 or 2.2% at $ 88.20 a barrel while US West Texas Intermediate (WTI) crude oil prices added $ 2.29 or 2.8% at $ 85.60 a barrel.


As a result, safe-haven assets such as the dollar and gold continued to rise as investors began to move towards safe-haven investments.


The dollar index, which measures a total of 6 other currencies, rose 0.06%.


The spot price of gold increased 0.25% at $ 1,847.61 per ounce.

Mixed with mixed ice, the exchange started to bounce

 At 9.10am the benchmark FTSE Bursa Malaysia KLCI (FBM KLCI) was up 2.86 points at 1,511.77 from Tuesday's close of 1,501.91.


The index opened 0.13 points at 1,508.78.


It opened mixed then began to swell, marking a rebound from losses recorded 7 days in a row amid continuing heightened concerns over the geopolitical crisis and the Federal Reserve (Fed) meeting ahead of Wednesday.


On the broader market, investors saw gainers outpacing losers by 150 to 97, while 201 counters were unchanged, 1,832 untraded and 30 suspended.


Total turnover at 100.62 million units worth RM50.18 million.



Rakuten Trade Sdn Bhd vice-president Thong Pak Leng said despite bargain-hunting activity, market sentiment remained volatile and still heavily dependent on regional volatility.


He added that although the 1,500 support level is quite resilient, if broken, the next support level is at the 1,480 level.


Heavyweights saw Malayan Banking Bhd (Maybank), Petronas Chemicals Group Bhd (Petchem) and IHH Healthcare add 1 sen at RM8.24, RM8.91 and RM6.34, Public Bank and CIMB Group Holdings Bhd up 2 sen at RM4. 20 and RM5.27 while Tenaga Nasional Bhd (TNB) and Press Metal Aluminum Holdings Bhd achieved 4 sen at RM9.10 and RM6.04.


Active stocks saw Pertama Digital Bhd add 0.5 sen at 64.5 sen, Dagang NeXchange Bhd (DNeX) up 2.5 sen at 88.5 sen and Senheng New Retail Bhd jumped 2 sen at 87.5 sen.


On the index board, FBM ACE bloomed 21.29 points at 5,992.29 and FBM 70 rose 25.54 points at 13,356.56 while FBM Emas added 20.21 points at 10,843.54, FBMT 100 was strong 20.02 points at 10,561.61 and FBM Emas Shariah reached 15.81 points at 11,516.60.


The Financial Services Index jumped 41.42 points at 15,702.32, the Products and Services Industry index reached 0.29 points at 198.91 and the Malay Plantation index 5.93 points at 6,625.38.

Senheng's First Day Ends 20% Below IPO Price

 Is this a bad sign for Senheng?


Shares of Senheng New Retail Bhd, a local electrical and electronics (EE) retailer, closed at 85.5 in Tuesday's trading session (January 25, 2022) representing a discount of 21.5 sen or 20.09% from the initial public offering (IPO) price of RM1.07.


During Tuesday’s trading session Senheng was the 2nd most actively traded stock on the local bourse with 163.55 million shares changing hands.


Its turnover is equivalent to 10.9% of the issued share capital of 1.5 billion.


During the morning trading session on Wednesday (January 26, 2022), Senheng traded actively at 87.5 sen.



The company's executive chairman, Lim Kim Heung, in an online media briefing said Senheng's plan to grab another 30% market share was not too difficult to achieve after the IPO as it had seen double-digit growth before Covid-19.


He added that the company has no plans to expand its company overseas but instead wants to focus exclusively on Malaysia with the goal of becoming a 'regional champion' within 5 kilometers of its branch.


Meanwhile, the retailer reported that its financial results for the 9 cumulative months ended September 30, 2021 there was an increase of 21.22% in net profit to RM34.05 million compared to RM28.09 million the previous year.


Ta Securities in its note stated with a target price of RM1.21 which represents a premium of 13.08% or 14 sen to the IPO price of RM1.07.


He added that the IPO price of RM1.07 will evaluate the EE retailer based on the remaining price-income ratio of 28.8 times based on the 2020 calendar year revenue.

January 25, 2022

Wall Street Market Makes ‘Comeback’ After Severe Early NY Session

 The Wall Street market saw its major stocks in positive territory after suffering losses early in the session, with uncertainty over geopolitical tensions and Federal Reserve (Fed) policies impacting falling oil prices and driving demand for safe-haven assets.


The main index, Dow Jones Industrial saw a 0.29% gain after falling more than 1,000 points at the start of the New York session, while the S&P 500 was up 0.28% and the Nasdaq Composite was up 0.63%.


The MSCI worldwide index that tracks stocks of 45 other countries was down 0.78%.


According to a note released by JPMorgan analysts, gains recorded late in the Wall Street trading session marked a surprise recovery for U.S. stocks that recorded a sharp decline last week since 2020.


He added that the decline indirectly gave investors an opportunity to get the stock at a lower price and helped drive it back up at the end of the session.


Meanwhile, investors are focusing on the Federal Reserve (Fed) which will begin a 2 -day meeting and Fed officials are seen ready to pull back an unprecedented stimulus as well as start a rate hike.



According to Megan Horneman, director of portfolio strategy at Verdence Capital Advisors, investors are beginning to be lazy and accept the reality of the Fed's simplistic monetary policy.


As a result, treasury yields declined with the benchmark 10 -year yield remaining at 1.75%.


The dollar index, which measures a number of other currencies, rose 0.26%.


In addition, the market was also turbulent with the Russia-Ukraine crisis when NATO said it would deploy troops in eastern Europe in addition to the US State Department has ordered family members of diplomats to leave Ukraine.


The spot price of gold rose 0.55% to $ 1,843.26 an ounce.


Brent crude oil price was down $ 1.62 or 1.8% at $ 86.27 a barrel while US West Texas Intermediate (WTI) crude oil price was down 2.2% or $ 1.83 at $ 83.31.


Bitcoin recorded a 6 -month low but still saw a slight increase at $ 36,921.

Exchange Sentiment Weakened Despite Global Markets Rising

 At 9.10am the benchmark FTSE Bursa Malaysia KLCI (FBM KLCI) was down 7 points at 1,514.86 from Monday's close of 1,521.86.


The index opened 4.77 points at 1,517.09.


It opened weaker following a sell -off in several large -cap stocks that caused the benchmark index to fall even as the Wall Street market posted gains.


On the broader market, investors saw losers outnumber gainers by 205 to 124, while 244 counters were unchanged, 1,707 untraded and 30 suspended.


Total turnover at 222.58 million units worth RM119.76 million.


A note issued by Malacca Securities Sdn Bhd stated the bounce on Wall Street had expected ‘bargain hunters’ activity to emerge on the local bourse especially in the technology sector.



He added that they believed investors would buy in the fall ahead of the earnings reporting season in February besides expecting investors to also keep an eye on consumer stocks and construction materials following the recent economic recovery.


Heavyweights saw Malayan Banking Bhd (Maybank), Petronas Chemicals Group Bhd (Petchem) and CIMB Group Holdings fall 5 sen at RM8.20, RM8.85 and RM5.20, Public Bank Bhd down 1 sen at RM4.18, IHH Healthcare Bhd declined 11 sen to RM6.36 and Tenaga Nasional Bhd (TNB) remained at RM9.11.


Active stocks saw Senheng New Retail Bhd down 12 sen at 95 sen, Metronic Global Bhd remained 2 sen and G3 Global Bhd added 1 sen at 8 sen.


Leading the list of losses was Complete Logistics Services Bhd down 24 sen at 3.72 then Senheng and IHH Healthcare.


On the index board, FBM ACE bloomed 6.41 points at 6,109.39 and FBM 70 rose 5.76 points at 13,411 while FBM Emas fell 36.43 points at 10,881.07, FBMT 100 declined 36.93 points at 10,588.11 and FBM Emas Shariah plunged 29.36 points at 11,597.56.


The Financial Services Index declined 59.55 points at 15,641.31, the Products and Services Industry index declined 0.73 points at 199.78 and the Malay Plantation index 29.78 points at 6,696.85.

Tesla is expected to continue to lead the EV world

 Tesla seems to continue to maintain its top position.


Rating agency Moody’s upgraded Tesla Inc’s rating from ‘Ba3’ to ‘Ba1’.


This indirectly reflects the rating agency's expectations of Elon Musk's company in maintaining its position as a leader in electric car (EV) production.



The note issued by the agency reinforces Tesla’s positive outlook and the company will continue to scale its operations as well as increase profits.


He added that Tesla's monetary policy will remain good and its liquidity level will continue to be smooth, adding that a more competitive EV battery electric vehicle offering will put pressure on the company's margins by 2023.


Last January, Tesla reported its quarterly record exceeding Wall Street expectations and overcoming global chip shortages as it boosted Chinese production.


In addition, the rating agency also expects Tesla to produce nearly 1.4 million cars in 2022 which saw an increase of 936,000 in 2021.

Finally, Senheng Made His Debut On The Bursa Malaysia Market

 A good start to 2022 for Senheng.


Senheng New Retail Bhd, a local electrical and electronics (EE) retailer, made its debut on the Main Market of Bursa Malaysia today (January 25, 2022) with a trading price of 90 sen, a 17 sen discount from the initial offer price (IPO) of RM1. 07.


During the morning trading session, the company’s shares were seen trading at 6.19 million shares.


Senheng was the first company to be listed on the Exchange this year.


The company's executive chairman, Lim Kim Heung, said the company aimed to raise RM267.5 million from the IPO of which RM22 million would be used to develop new brand businesses and RM106.5 million for the purpose of upgrading stores and building new stores.



He added that RM29.7 million will be used to upgrade the company's warehouse and logistics network and the remaining RM55.3 million will be used to repay bank loans and listing expenses.


Meanwhile, Rakuten Trade in a note stated Senheng will benefit from increased demand in the innovative EE consumer products segment and increased disposable revenue.


He added that the firm expects Senheng to record 3 -year revenue and a compound annual growth rate of net profit (CAGR) of 12.8% and 19.9% ​​at RM1.86 billion and RM95.5 million for financial year 2023 (FY23).


It is common knowledge that Senheng is the largest local EE retailer with 105 physical stores and manufactures 10,000 storage units (SKUs) from over 280 domestic and overseas brands.


As of the midday session, its shares remained traded at 90 sen with 95.82 million shares traded.

MITI Lists 5 Potential Sectors Under the NIA Initiative

 The Ministry of International Trade and Industry (MITI) has listed 5 key sectors under the National Investment Aspirations (NIA) initiative that are able to attract foreign investors to invest in research, development, manufacturing facilities and new technologies.


The 5 sectors are:


electrical and electronic

pharmaceutical

digital economy

aerospace

chemistry


According to Mohamed Azmin, Senior Minister and Minister of Miti, these sectors are among the economic growth sectors identified as potential and in line with the NIA initiative which focuses on high-impact investment and technology.


He added that it will create quality and highly skilled employment opportunities for locals as well as strengthen the country's competitiveness.


Meanwhile, the Electric Vehicle (EV) Task Force has been established as a platform to discuss strategies and implement measures to drive EV development in the country.

January 24, 2022

Situation in US stock market may exacerbate due to Fed's upcoming meeting this week

 The US stock market was bearish last Friday. The NASDAQ lost 287 points, the S&P 500 tumbled by 63 points, and the Dow Jones plummeted by 329 points. The plunge came due to the hawkish stance adopted by the US Federal Reserve this year. No wonder, the US stock market started to react to policy tightening. At the same time, the regulator has not finished the winddown of asset purchases yet. It just reduced the QE program by $45 billion a month. This means that the US central bank will continue to pump up cash into the American economy. For that reason, market participants showed no reaction to the Federal Reserve's actions. At the same time, they have already acknowledged the fact that this is going to be a tough year for the economy. That is why stock indices have been bearish since the beginning of the new year. Moreover, a prolonged correction could emerge.


The first 2022 policy meeting of the Federal Reserve is likely to become the crucial event of the month. Market participants are sure that the regulator will cut the QE program by another $30 billion and abandon it entirely in March. This factor could be enough to push stock indices further down. Notably, a plunge could be similar to January's. Above all else, the central bank is likely to raise interest rates as early as March. Nevertheless, the adage "Buy the rumor, sell the fact" is now working. All we can do is suggest a possible fall in the US stock market this year. Speaking of the Fed's policy meeting. The market will focus not only on the rate decision but also on Chair Powell's comments. Today, only several investors doubt that there are going to be at least 3-4 rate hikes. At the same time, Mr. Powell has just hinted at the first rate hike but has never spoken about it openly. In fact, unlike his colleagues, he takes up a rather cautious stance every time he speaks. So, Powell's hawkish comments could trigger a sell-off in the stock market. Likewise, Bitcoin and other cryptocurrencies have recently been bearish. Indeed, risk assets are at the highest risk when it comes to policy tightening. For that reason, cryptos are falling in January.



Market Pressure Rises, Stocks Continue to Fall

 Market expectations of a bond purchase reduction program (tapering) and a 0.25% rate hike in March by the Federal Reserve (Fed) continued to weigh on stock markets with shares in Asian markets falling.


It is believed that the Fed will start the first step of a rate hike of 0.25% and 3 more times a hike of up to 1.0% by the end of the year.


Moreover, concerns about the Russia-Ukraine crisis with the U.S. State Department pulling out family members of embassy staff in Kyiv and President Joe Biden’s report considering sending thousands of troops to NATO allies in Europe impacted the stock market.


The MSCI broad index of Asia-Pacific stocks outside Japan was down 0.1% and Japan's Nikkei was at 1.0% but Wall Street futures tried to make a rebound with the S&P 500 futures up 0.4% and the Nasdaq Composite futures at 0.7%.


Capital Economics economist Oliver Allen noted that despite the decline, the S&P 500 is still 40% at its highest level since 2019 and the Nasdaq 60%.


He added that investors could not rely on the ‘Fed put’ as the central bank tightening cycle had not yet begun and the strength of the US economy showed that tighter policies were more appropriate.



Meanwhile, the earnings season went well with companies reporting this week including IBM, Microsoft, Johnson & Johnson, Intel, Tesla, Apple and Caterpillar.


10 -year treasury yields rose 22 basis points at 1.77%.


The dollar index, which measures a number of other currencies, rose 0.5% at 85.647 while the Euro was at $ 1.1341 after failing to sustain a recent rally at $ 1.1500.


The Japanese yen, a safe haven currency, was at 113.66 and approached last week's low of 113.47.


Gold traded at $ 1,833 an ounce after hitting a 6 -week high of $ 1,842 last week.


Oil prices soared further with Brent oil prices adding 74 cents at $ 88.64 a barrel while US crude oil prices rose 70 cents at 85.84%.

Exchanges Open Lower Due to Regional Market Uncertainty

 At 9.10am the benchmark FTSE Bursa Malaysia KLCI (FBM KLCI) was down 4.08 points at 1,522.98 from Friday's close of 1,527.06.


The index opened 5.34 points at 1,521.72.


It opened weak amid regional market uncertainty including tracking a weak close on the Wall Street market on Friday.


On the broader market, investors saw losers outnumber gainers by 252 to 111, while 259 counters were unchanged, 1,647 untraded and 11 suspended.


Total turnover at 223.78 million units worth RM112.02 million.



Ratuken Trade Sdn Bhd's vice president of equity research, Thong Pak Leng, said the Wall Street market experienced a slump as investors repositioned into the bond market as 10 -year yields fell to 1.77%.


He added that the KLCI is experiencing some problems and is expected to hover at 1,520-1,535 on Monday.


Heavyweights saw Malayan Banking Bhd (Maybank) fall 5 sen to RM8.23, Public Bank Bhd and Petronas Chemicals Group Bhd (Petchem) remained at RM4.18 and RM8.89, IHH Healthcare fell 3 sen to RM6.54, CIMB Group Holdings Bhd fell 7 sen to RM5.23 and Tenaga Nasinal Bhd (TNB) rose 4 sen to RM9.14.


Active stocks saw Dagang NeXchange Bhd (DNeX) up 1.5 sen at RM1, Coraza Integrated Technology Bhd added 8 sen at 74 sen and Aimflex Bhd and OCR Group Bhd jumped 0.5 sen at 18 sen and 15 sen.


On the index board, FBM ACE bloomed 6.59 points at 6,131.11, FBM Emas fell 28.39 points at 10,930.86, FBMT 100 declined 27.82 points at 10,637.63, FBM Emas Shariah plunged 15.12 points at 11,646.08 and FBM 70 lost 32.14 points at 13,442.69.


The Financial Services Index declined 72.26 points at 15,701.35, the Products and Services Industry index declined 0.12 points at 200.71 and the Malay Plantation index 6.81 points at 6,692.47.

3 Injections of Sinovac Able to Resist Omicron

 3 injections for Omicron opponents, 4 injections for Megatron opponents.


A study conducted by Sinovac Biotech Ltd found that 3 doses of Sinovac Covid-19 were able to produce 95% higher neutral antibodies compared to 3.3% for 2 doses against variants of concern (VOC) including Omicron.


According to Pearson Liu, a spokesman for Sinovac, the study found that the inactive vaccine (the most widely used in the world), is highly effective against Covid-19.



The study was conducted on 120 participants receiving 3 doses of CoronaVac, isolated 323 human monoclonal antibodies (antibodies made by cloning unique white blood cells) that targeted various areas of the virus to find effective vaccines and found over 300 antibodies exhibiting effective elimination activity. .


He added that the study found that 3 doses of Sinovac were sufficient to kill most VOCs and variants as well as having the ability to react with the Omicron receptor binding domain.


The results of the study found that about a dozen antibodies showed a direct and very strong neutralizing effect for the Omicron variant in which the antibodies performed neutralization by directly blocking the interaction between the virus and human cells.


Meanwhile, Pharmaniaga is a major supplier of Sinovac vaccine in Malaysia and with the Armed Forces Fund Board is a major shareholder of the company.

China's Evergrande Shares Soar After Appointing New Officials

 The restructuring of Evergrande's 'great wall' began to bear fruit.


The appointment of an official from China’s national asset management unit, Cinda Asset Management as a board of directors by Evergrande China saw the shares of the world’s most indebted company jump 13%.


The restructuring of Evergrande led by the Guandong provincial government has seen the company’s assets expected to be taken over by a state -owned firm and the appointment marks the restructuring being done is well underway.



Financial intelligence provider REDD last Friday backed shares of the company’s developer which aims to release the framework of Evergrande’s debt restructuring plan by March.


In addition, the restructuring also saw plans to divert the company's external assets and sell them to pay off offshore debt as a stimulus to foreign lenders' hopes of recovering funds.


In the meantime, the developer said it will appoint 2 new board members, namely non -executive director, Ling Senlin who is the chairman of China Cinda (HK) Holdings Company Ltd and Siu Shawn, chairman of China Evergrande New Energy Vehicle Group Ltd.


Meanwhile, the company will prioritize the growth of its EV business in October over its still troubled real estate operations.

No Way Out Of PN17 For AirAsia

 It's hard to fly high like this.


According to CGS-CIMB Research, the firm had to maintain a ‘reduction’ branch on AirAsia Group Bhd (AAGB) at 60.5 sen with a lower target of 9 sen after checking the airline’s RNAV calculation.


The research firm stated in a note dated January 21 that they were not sure how AAGB would come out of the Practice Note 17 (PN17) rating without a significant increase in equity capital.



CGS-CIMB added that since AAGB's auditors expressed significant uncertainties related to the ongoing efforts in its audit report for the FY20 accounts, AAGB needs to have shareholders' equity of at least 50% of its paid-up share capital.


He added that one of the options for AAGB to reduce its gap is for AAGB to get shareholders' and court approval for a capital reduction which means that RM5.8 billion of retained losses (as of September 30, 2021) can be offset by a paid -up share capital of RM8.5 billion left. the remaining paid -up share capital of RM2.7 billion.


Meanwhile, AAGB will continue to struggle to exit PN 17 status with a huge RM4.55 billion gap in shareholders' funds even with potential capital reductions other than RM650 million warrants and RM778 million in the remaining RCUIDS may not be converted into shares soon. with shares below the conversion price.


Meanwhile, AAGB shares declined 1.65% or 1 sen to 59.5 sen with a share value of 4.27 million.

January 21, 2022

Collapse in US stock market begins

 So, a collapse in the US stock market has officially begun. Over the past two weeks, the NASDAQ has lost 1,700 points, the S&P 500 has dropped by 343 points, and the Dow Jones has fallen by 2,140 points. Clearly, this is not Black Friday. Nevertheless, such behavior of the major US stock indices shows that investors have started to sell off certain stocks. Tech stocks are at the highest risk. So, Tesla stock tumbled by $198 in the past two weeks, Apple dropped by $20, and Microsoft lost $40. So, markets are now pricing in what is currently happening, we may say. What do we know at this point? The US Federal Reserve made it clear that it would abandon the QE program and make 3-4 rate hikes in 2022. Some major market participants suggest there could be even more rate hikes and the regulator could not only end asset purchases but also start to reduce its balance. In other words, it could announce a sell-off of its Treasury securities purchased over the past 10 years. The US central bank started to buy out securities after the world was hit by the financial crisis in 2008. Not all market participants are content with the hawkish Federal Reserve. Indeed, policy tightening is posing a real threat to risk assets. Therefore, stocks and cryptocurrencies are falling in the first place. At the same time, bonds, deposits, and other low-risk assets may increase. Yields on such investment instruments are likely to grow if interest rates are raised. Generally speaking, stock demand is expected to decrease this year. Moreover, there is a bubble in the stock market.


In addition, yesterday's US statistics came disappointing. The weekly jobless claims report logged a rise in initial claims for unemployment benefits to 286K, well above market expectations of 227K. Meanwhile, the number of continuing jobless claims increased to 1.635 million. So, unemployment in the country is accelerating, and Omicron could be the reason why. In addition, the Nonfarm Payrolls reports came pessimistic in the past two months, which means that the US jobs market is recovering slower than planned. Therefore, the Federal Reserve's primary goal in 2022 will be to curb inflation. For that reason, the US stock market is expected to go through tough times this year.



Sentiment Weaken, Bursa Malaysia Opens Mixed Again

 At 9.25am the benchmark FTSE Bursa Malaysia KLCI (FBM KLCI) added 0.83 points at 1,528.58 from Thursday's close of 1,527.75.


The index opened 1.06 points at 1,528.81.


It opened mixed with the key index rising slightly 0.05% as sentiment continued to weaken in the market.


On the broader market, investors saw losers outnumber gainers by 295 to 159, while 269 counters were unchanged, 1,512 untraded and 12 suspended.


Total turnover at 426.06 million units worth RM196.79 million.



A note issued by Malacca Securities Sdn Bhd said investors were still worried about the rate hike as well as concerns over the growing Covid-19 case would spread to local stocks and profit-taking activity at tech counters would emerge.


He added that they believed technology and plantation stocks would remain positive while technology stocks would change due to profit -taking activities and expected the building materials segment to get attention as metal prices soared.


Heavyweights saw Petronas Chemicals Group Bhd (Petchem) up 13 sen at RM9.08, CIMB Group Holdings Bhd added 2 sen at RM5.27, Tenaga Nasional Bhd (TNB) jumped 1 sen at RM9.08, Press Metal Aluminum Holdings Bhd drove 7 sen at RM6.19, Public Bank Bhd and IHH Healthcare remained at RM4.17 and RM6.55 respectively while Malayan Banking Bhd (Maybank) declined 1 sen at RM8.27 and Hong Leong Bank declined 18 sen at RM19.16.


Active stocks saw Dagang NeXchange Bhd (DNeX) gain 2 sen to 98.5 sen, G3 Global Bhd, Ageson Bhd and Talam Transform Bhd remained at 8 sen, 2.5 sen and 2 sen while Aurelius Technologies Bhd declined 5 sen to RM2.02.


On the index board, FBM ACE bloomed 2.27 points at 6,163.40, FBM Emas Shariah was down 12.23 points at 11,690.12, FBM 70 was down 77.91 points at 13,487.39, FBM Emas was down 11.84 points at 10,968.77 and FBMT 100 buds 9.29 points at 10,675.93.


The Products and Services Industry Index rose 1.03 points at 202.27, the Financial Services index declined 21.82 points at 15,757.01 while the Plantation index bloomed 1.84 points at 6,680.83.

Supermax Continues to Shake, Canadian Government Terminates Contract

 After the United States (US), now it's Canada's turn.


Supermax Corp Bhd confirmed that the Canadian government has terminated the contract for the supply of nitrile gloves following allegations of forced labor.


According to Exchange filings, Supermax Canada Inc., a subsidiary of Supermax in Canada has agreed to terminate a joint agreement with the Canadian government on 2 existing contracts for the supply of nitrile gloves.


Meanwhile, Supermax added the contract to supply other personal protective equipment (PPE) products in Canada would not be affected.


For the record, Supermax has faced import restrictions by U.S. Customs and Border Protection (GST) which has issued a Detention Release Order (WRO) after finding the company was practicing forced labor practices in October last year.



As a result, Supermax's net profit for the 1st quarter ended September 30, 2021 (1QFY22) fell 1/3 to RM638.52 million from RM958.71 million recorded in the previous quarter (4QFY21).


In addition, Supermax's quarterly revenue declined 22.4% to RM1.45 billion quarter -on -quarter from RM1.88 billion in 4QFY21.


On an annual basis, its quarterly net profit fell 19% from RM789.52 last year and revenue was 7.62% higher than RM1.35 billion in the previous corresponding quarter.


Supermax said it recorded an increase in sales from additional capacity generated by its latest plant that was commissioned that year.


Meanwhile, Supermax also stated that they have begun efforts to comply with International Labor Organization (ILO) standards on foreign workers since 2019.


As proof, the company has launched a new and comprehensive foreign worker management policy such as providing the same salary structure and benefits for foreign workers in Malaysia besides resetting the minimum wage to RM1,400 used for each category.

Wall Street's Bounce Stumbles, Investors Continue to Be Restless

 The rebound in the Wall Street market stalled as investors lost interest in the movement during the morning trading session as concerns over inflation and rising interest rates resurfaced.


Markets are back in turmoil with concerns about the Federal Reserve (Fed) accelerating interest rate hikes this year further worsening the situation as investor sentiment becomes erratic awaiting a policy meeting by the US Central Bank next week.


The Dow Jones Industrial average index fell 0.89%, the S&P 500 lost 1.1%and the Nasdaq Composite was down 1.3%.


US stocks that turned red late in the trading session caused the MSCI worldwide index to fall 0.32% while the pan-European FTSEurofirst broad index rose 0.51%.



US 2 -year treasury yields rose 1.2 basis points at 1.037% while 10 -year treasury yields fell 1.2 basis points at 1.815%.


Meanwhile, China's CSI 300 blue -chip index rose 0.9% on the back of property developers despite pressure from China's great wall government in easing fund pressure in the affected sectors.


The dollar index, which measures a total of 6 other currencies, rose 0.197% at 95.797 while the Japanese Yen fell 0.17% at US $ 114.1200 and the Euro was down 0.27% at US $ 1.1310.


Meanwhile, crude oil prices rebounded but remained below ground with Brent crude falling 6 sen at US $ 88.38 a barrel and US crude futures down 6 sen at US $ 86.90 a barrel.


Tensions between Russia and Ukraine as well as inflation concerns have pushed gold and silver to new 2 -month highs with US gold futures remaining at US $ 1,842.60 an ounce while silver prices rose 2.1% to US $ 24.63 an ounce.