Steep selloff in plantation heavyweights sent the FBM KLCI into the negative territory amidst mixed regional performances. Investors are likely to trade cautiously at the start of the session, prior to the release of Malaysia’s inflation rate tomorrow. Nevertheless, we believe bargain hunting activities could kick in as the concerns over inflation may have priced in and traders may focus in the recovery-themed sectors. Also, we believe buying interest may emerge in the technology stocks in line with the rebound in Wall Street.

ELK’s hire purchase receivables stood at RM468.1m as at 4Q22, representing a 10.5% decrease from the previous corresponding quarter. Although Malaysia is transitioning into endemic phase and recovering economy bodes well for ELK’s hire purchase portfolio expansion, we reckon the expansion might be gradual as ELK remained cautious to preserve its asset quality. For the furniture segment, we foresee marginal growth in the near term with more work forces returning to office.

Carimin Petroleum Bhd (CARIMIN) was established in 1989 and specialised in provision of technical and engineering support services in the oil and gas industry in Malaysia. To-date, CARIMIN has amassed and completed projects valued more than RM1.00bn with notable clients include PETRONAS Carigali, Shell, Murphy Oil, Repsol, Exxon Mobil, New Field, Petrofac, HESS and Nippon Oil.

The FBM KLCI underperformed its regional peers, due largely to final hour selldown in selected banking and commodity related heavyweights. Given the buying into the dip move on Wall Street, we expect some bargain hunting activities may emerge on the local front, especially in the technology stocks. Investors may watch out for Malaysia’s inflation rate and the US FOMC meeting minutes this week.

We note that the construction of the second jetty at Sapangar Bay Oil Terminal (SBOT) is on track for completion in 4Q22 in bid to ease the current congestion and reduce vessel waiting time. This move will boost the capacity to undertake additional port activities as current existing facilities are already accommodating approximately at 90.0% of total capacity.

The FBM KLCI fell in tandem with most of the regional markets (except for China) due to concerns over elevated inflation and prolong Russia-Ukraine conflicts. Investors may remain cautious over the near term as current market sentiment could be exacerbated by the ongoing volatility on Wall Street. On a side note, Indonesia’s move to lift a ban on palm oil export could bring a relief to global market and lower the CPO price.

Moving forward, MSC remains committed to improve their daily mining output level through further automation process as well as deploying new machineries to ramp up production efficiency. The move may see MSC hitting a production of 12 tonnes/day (from 11.5 tonnes/day at present).

The FBM KLCI rebounded as investors continued to scoop up beaten-down shares, especially the banking heavyweights. Nevertheless, we expect market sentiment to remain fragile as volatility and selling pressure resumed on Wall Street on the back of inflation fears and weak results from retailers. Also, the hard-hit technology stocks may face further selloff under this interest rate hike environment. Nevertheless, we are slightly positive on the recovery-themed sectors.