Daily Commentaries 19th Oct 06

Profit taking was evident in the KLCI ahead of the long holidays next week. In today’s news, Dialog secured a letter of acceptance for a RM89.5m EPCC contract to build an oil terminal in Johor and IJM proposed to acquire Road Builder via a share swap of 1 new IJM share for 2 Road Builder shares. On the MESDAQ front, Scicom released results that reflected its strong growth prospects. CME Group announced a RM211.2m contract from Jabatan Bomba for the delivery of 200 fire trucks while Transmile may benefit from additional air freight rights to carry cargo from China to the US. After 2 days of retracement, we believe that the market may experience a rebound today bolstered by a new overnight high of the DJIA in the US which briefly flirted with the 12,000 pts level. However, more profit taking ahead of the festive season next week will likely cap the rebound with resistance at the 980 pts level. Support is still at 970 pts.