Daily Commentaries 16th Oct 06

The market may extend its fine run riding on the coattails of Dow's record performance last week and positive local retail sentiment. Bursa's deferment of short-selling to next year is likely to be a non-event today as it would have already been discounted by the market. The Government has also agreed on a water tariff hike for Klang Valley although the effective date has yet to be determined. Other major news includes the announcement of a corporate exercise by F&N Group later today and Boustead's acquisition of a 4.9% stake in Boustead Shipyard from KUB. Also, a decision is expected soon on the RM15bn undersea cable project linking the Bakun Dam in Sarawak and the Peninsular following top-level presentations made to the government last week. Unconfirmed news also points to Tronoh winning coal power plant projects in Indoneisa. We believe any profit-taking from the strong rally last Thursday and Friday should be well absorbed with the market likely to attempt the next immediate resistance at 990 on buying support. The long festivities next week and year-end window dressing activities by local funds are positive upside catalysts. Support for the market is pegged at 980.