Daily Commentaries 1st Nov 06

Buying into selected heavyweights helped to lift the market by 2.23 points yesterday while regional stocks ended mostly higher. Topping the corporate news today is Pos Malaysia’s plans for a cash distribution of RM1.50/share, which is higher than expectations. The new water tariff for KL, which takes effect today may spur trading interest in Puncak Niaga. Meanwhile, MISC has confirmed its order for four Aframax tankers while PLUS confirmed that it did not make any offer in relation to Silk Highway. Bursa Malaysia posted a strong set of results and announced a 28sen special dividend. We my see further efforts to break the 990 resistance level, supported by several positive newsflow. This includes (i) Perwaja Steel's debt arrears of another RM200m to TNB would be settled over the next 12 months; (ii) the government’s assurance that it has sufficient funds to finance development projects; (iii) SC’s move to allow for structured warrants on foreign shares; and (iv) North Korea’s agreement to return to nuclear-disarmament talks. On the downside, the poor performance by the Dow overnight due to worries on consumer confidence and the manufacturing sector could put a brake on the local market. Our initial support is at the 984 pts level followed by the 980 pts level and the 970 pts level.