MyEG, Datasonic rebound as risk-on trade returns

Risk-on sentiment is boosted by optimism over the outcome of the extended trade talks between the US and China


Shares of e-services providers, MyEG Services Bhd and Datasonic Group Bhd, rallied as investor appetite for risk resurfaced while share buybacks helped the beaten down stocks rise.

MyEG shares climbed to a one-month high of RM1.05, up by 9.5 sen or 10%, while Datasonic shares ended seven sen, or 16.28%, higher at 50 sen on improved volumes. Other e-government services companies such as Prestariang Bhd, Dagang NeXchange Bhd and Iris Corp Bhd also edged higher.

Inter-Pacific Research Sdn Bhd head of research Pong Teng Siew said the risk-on sentiment is boosted by optimism over the outcome of the extended trade talks between the US and China.

“This rebound has to do with improvement or willingness of markets everywhere, not just Malaysia, to take more risk. So, it’s a risk-on factor that is at work here,” Pong told The Malaysian Reserve.

Rakuten Trade Sdn Bhd VP of research Vincent Lau said the improved sentiment is driving retailers to bargain hunt stock with compelling valuations.

“Most of the smaller stocks are making a comeback. People are back in the market and these are some of the stocks that retailers are interested in,” he said.

Lau said the uptick in MyEG and Datasonic prices comes after both stocks lost significant value in recent months.

“I guess the overall sentiments on these stocks have improved and fundamentally, they are okay,” he said.

MyEG has continued to buy back its shares as the Employees Provident Fund ceased to be a substantial shareholder. Yesterday, the company bought another 4.2 million shares for RM3.8 million, bringing its total stock buyback to 10.5 million shares worth RM9.79 million since Jan 2, 2019.

Analysts expect a recovery of the information technology (IT) company to continue, taking cues from the government’s digitalisation agenda — as reflected in the midterm review of the 11th Malaysia Plan (11MP).

“The government’s budget will be affected by oil prices. In the last few days, we’ve seen oil prices rebounding and I think the US West Texas Intermediate (WTI) crude oil will be above US$50 (RM205.56) per barrel shortly.

Hopefully, that will translate into more government spending than previously estimated,” Pong said.

WTI crude oil futures stood at about US$50.75 per barrel at 7pm yesterday. It was the first time this year that WTI has topped US$50 a barrel. International Brent crude futures were up 42 cents at US$59.14 per barrel.

MyEG’s move to expand its suite of services and to markets like the Philippines suggests a defensive move to lower its dependence on a few large contracts and the Malaysian market.