September 12, 2006

Daily Commentaries 13th Sep 06

OSK Research

Technical View

With oil prices falling yesterday morning and CPO prices following suit, profit taking activities on plantation and oil & gas counters was evident with the former pushing the KLCI below the 950 pts before a last minute rally helped it to close at the 953 pts support level. However, the market again appeared to be two-tiered with heavy volume on lower liners such as Iris, Mobif and Tebrau resulting in large gains for these counters and more gainers than losers overall on a volume surge of 710m shares traded. For today, major news is in the form of QSR making a GO for KFC shares, the proposed privatization of Intan Utilities at RM2.10 a share and negotiations between the Government and financial institutions on ways to implement the 10:90 Build-then-Sell concept for housing. Contracts announced include Hexagon’s provision of specialty illumination products worth potentially RM65m to petrol stations across Asia Pacific and other areas from a global oil major and HeiTech Padu’s 2 year RM18.5m contract to maintain the travel documents and immigration control system for the Immigration department. Oil prices continued to slide with the IEA predicting lower demand going forward. Although this will bode well for airlines, it may put continued pressure on plantation and oil & gas counters although we believe bargain hunting activities may emerge to cushion the fall. As such, for the KLCI, the 953 support level looks tenuous with the 948 level being the stronger support. However, things still look positive for the broader market with retailer interest likely to be sparked on more speculative counters after the overnight rally on Wall Street.


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