Technical | Fundamental Analysis Discussion Stocks Listed In Bursa

Saturday, December 11, 2010

Bursa shares likely to trade firmer next week

KLCI Chart

KUALA LUMPUR, Dec 11 — Shares on Bursa Malaysia are likely to trade firmer next week with more inflow of funds despite the market’s short-term weakness and concerns about China’s monetary policy and the eurozone crisis.

The FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBM KLCI) staying above 1,500 on good volume gave credibility on its resilience, Affin Investment Bank Head of Retail Research Dr Nazri Khan said.

This week, the key market barometer rose by 6.3 points to 1,507.28 after rising near the historic high of 1,528.01 on Thursday on strong buying interest on key heavyweights but succumbing to profit taking a day later as investors opted to sell on strength.

“Despite short term weakness on Friday and concern in China/Europe, we see positive investor risk attitudes in the local equity market, possibly driven by good corporate earnings and ample talks on consolidation exercise,” Nazri said.

Other factors include impending election hype, stronger commodity price, attractive local bond yield and hot-money carry trade play.

The fact that Dow Jones at a new two-year high and Nikkei at a new seven-month high is likely also influence Asian indices, including FBM KLCI, higher.

“We also expect reduced equity volatility for the rest of this month to support FBM KLCI higher given the downtrend of the CBOE Volatility Index which suggests declining investor anxiety,” Nazri said.

The looming “January effect” with year-end accumulation of selected blue chips in the last few weeks of the year is also supportive for the local market.

“Currently, we see the property and construction sectors (with focus on the politically-connected-election-linked counters) as the two sectors dominating the local bourse January effect,” he said.

As the property and construction indices remain very close to three-year highs, there is expectation for more strength of the sectors to push FBM KLCI higher.

“Going forward, we believe the local market is likely to show more resilience with a potential upside break-out next week. Given ample liquidity now, we are not surprised to see FBM KLCI aiming for 1,530 in the near term,” Nazri said.

Any close above 1,530 would lead FBM KLCI to a good bull rally towards an all-time-high of 1,550 in the early part of next year, he added. On a weekly basis, the FBM Emas Index increased by 84.98 points to

10,255.42, the FBM Top 100 Index added 66.2 points to 10,010.48 and the FBM Ace Index jumped 68.28 points to 4,261.36.

The Finance Index increased 217.25 points to 13,767.5 while the Industrial Index was lower by 66.96 points to 2,786.66 and the Plantation Index surged 35.76 points to 7,862.13. Petronas Chemicals was among volume leaders. It ended four sen higher at RM5.58. Its parent company, Petronas, had signed a memorandum of understanding with BASF to undertake a joint feasibility study to produce specialty chemicals in the country which could involve a joint investment of up to RM4 billion.

Tenaga Nasional which had said it would ask the government to review the tariff for natural gas if coal prices were to rise significantly and become a financial burden, dropped 19 sen to RM8.60.

The average coal price has increased to over US$110 a tonne, which will definitely affect the utility giant’s bottom line.

DRB-Hicom which had said that it was not aware of talks on any privatisation proposals, was also actively traded. It added 15 sen to RM1.80.

There was a report saying that Tan Sri Syed Mokhtar Al Bukhary was believed to be considering taking the auto and banking group private.

The market’s weekly volume rose to 4.968 billion shares valued at RM8.94 billion from 4.89 billion shares valued at RM9 billion.

The Main Market turnover declined to 3.754 billion units worth RM8.612 billion from 4.23 billion units worth RM8.85 billion but volume on the ACE Market jumped to 375.025 million shares worth RM84.661 million from 298.08 million shares worth RM84.46 million.

Warrants increased to 827.357 million units valued at RM233.123 million from 347.79 million units valued at RM61.13 million. — Bernama

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