Daily Commentaries 30th Oct 06

Friday's torrid performance sets the stage for a stronger upside with more window- dressing activities anticipated over the next few weeks. Despite the holiday-shortened trading week, notable newsflows did hit the market on Friday with Pos Malaysia, on the request of Khazanah, suspended the trading of its shares ahead of a capital repayment exercise and internal restructuring. Sugar Bun appears to have also jumped on to the oil and gas bandwagon with the acquisition of an O&G outfit in Thailand that could result in the re-alignment of its long-term business direction although it denied rumours of a RM300m Petronas contract. Aside from that, OYL is a step closer to a de-listing with Daikin having already secured 96% of its shares under the takeover offer. Malakoff makes business headlines this morning with the intention to bid for a power project in Pakistan worth US$300m (RM1.1bn) while Bank Pertanian is getting a boost in the form of a RM1bn injection from the government to transform into a full-fledged agriculture commercial bank. In terms of results, Nexnews and Pensonic fared better in the quarter just ended. With investors returning from their long break today coupled with the spillover positive sentiment from the previous week- underscored by fresh catalysts, the market faces a real test in the interim to close the gap with the psychological 1,000 mark. We do not discount the return of profit-taking activities to digest gains made over the last 2 trading sessions although we think the impact should be well absorbed. Immediate support and resistance are seen at 980 and 990 respectively. The Dow's rally in recent sessions is expected to be sustained by the strong 3Q earnings season while oil prices should be kept firm at above the US$60 per barrel.