Daily Commentaries 20th Oct 06

As expected, the market rebounded slightly taking the cue from US markets although the upside was capped by profit taking ahead of the Deepavali and Hari Raya celebrations. For today, JVs are in the news with Sime Darby, Guthrie, Golden Hope and PNB entering into a JV to venture into the Cattle-rearing business, Berjaya Corp having acquired 12.5% of recent IPO StemLife, IGB entering into a JV with IJM Properties to develop land in Gombak with a sales value of RM300m, ILB entering into a JV to provide logistics services in the Middle East and MESB announcing a JV to construct telco towers and structures in Penang. Cancellation of previous agreements also seems to be the flavour of the day with Tebrau Teguh cancelling its development agreement with Aset Nusantara Development for the development of 530 acres in Johor and AIC terminating a MOU with Daewoo International for the manufacturing of wire harnesses for the auto industry. Aside from these, Sumatec is ordering 2 tankers from China for RM43.9m while JAKS is seeking an injunction against PUAS, SYABAS and the Government of Selangor for breach of contract in relation to the supply of water pipes and LCL proposed a private placement, bonus issue and transfer to Main board. YTL Power also announced a 1-for-25 treasury shares distribution, Sime Darby is planning a REIT and TRC Synergy secured a RM125m contract for the Dang Wangi Police HQ. Despite the slew of corporate news and the Dow breaking the 12,000 pts level, we feel that investors may stay away ahead of the festivities and expect rangebound trading. Oil was above US$59 per barrel on news that Opec would cut 1.2m bpd of production. Resistance is now at 984 pts while support remains at 970 pts.