Although there were signs of rebound on the FBM KLCI, the pace of recovery is expected to be measured over the foreseeable future. Following the weakness on Wall Street overnight, we believe that volatility will remain a feature on stocks across Bursa exchange amid the un-easing concerns over rising risk of recession stemmed by persistently high inflation and on-going monetary tightening environment. The lower liners may face another round of selloffs as investors are likely to unwind their position as market uncertainties prevails.

Following the conclusion of the two-day US FOMC meeting that saw the pace of the interest rate hike came in line with market expectations, we think that markets conditions should turn calmer. Mild bargain hunting activities may emerge at least for the near term after majority of the stocks have fallen into the oversold territory. Still, we reckon that the lack of fresh market catalysts and anxieties over the lingering inflationary pressure could result in market environment to remain wary and cautious overtime, which may keep the upside limited.

Dayang Enterprise Holdings Bhd (DAYANG) is regarded as an integrated services provider to the oil and gas industry, with services include provision of maintenance services, fabrication operations, hook-up and commissioning and chartering of marine vessels. With approximately 30 years of oil and gas experience, DAYANG has successfully established a solid track record, supported by 2,000 employees.

The FBM KLCI snapped its 8-day losing streak and bounced higher, outperforming the mixed broader market. Given the mixed trading activities on Wall Street, we believe sentiment on the local front may remain tepid ahead of the interest rate decision by the US Fed in the upcoming FOMC meeting. On a side note, the recent South Korea strike could further impact the global supply chain of chip productions.

The FBM KLCI plunged below its 52-week low in tandem with regional peers, shaken by worries that the hot inflation will drag the economy into recession; We have seen net foreign selling continued to increase (5-day cumulative net foreign selling: RM600.1m). Given the significant selloff overnight on Wall Street, we believe there might be another selling wave prior to the US FOMC meeting, eventually impacting the local bourse negatively for the session.

Aeon Co. (M) Bhd (AEON) set into Malaysia back in 1984 known as Jaya Jusco Stores Sdn Bhd. Throughout the years, AEON has evolved into a leading general merchandise store cum supermarket chain, with 34 AEON Stores, 28 AEON Mall, 21 AEON BiG, 9 AEON MaxValu Prime, 65 AEON Wellness, 42 Daiso and 3 Komai-so across Malaysia.

The FBM KLCI posted steep losses last Friday amid regional pullback except for China stock markets; net foreign selling in the past 5 sessions stood at RM446.2m. Global stock market undertone could remain negative as the blistering inflation in the US may fan investors’ worries on further interest rate hikes and more quantitative tightening going forward. We believe the global weakness will spill over to the local front with limited bargain hunting activities as investors trade cautiously ahead of US Fed’s and UK Bank of England’s interest rate decision this week.

Established in 1991, Supercomnet Technologies Bhd (SCOMNET) has now evolved into a global award-winning medical devices and cable specialist. The group is embarking into a relatively large-scale expansion on its existing 4 factory buildings that will boost built-up area to more than 30,000 sqm upon completion in coming years. We initiate coverage on SCOMNET with a BUY call and fair value of RM1.51, based on a target P/E multiple of 38.0x (which is in line with the 5-year historical average) to FY23f diluted EPS of 4.0 sen.