Daily Commentaries 15th Dec 06

After a good start, the KLCI failed to sustain its momentum yesterday and lost ground before closing off its lows at 4.13 pts down. Volume again failed to break the 1bn shares mark. The sharp hike in toll rates, up to 60%, was announced as expected. Today’s main news is on Wilmar’s US$1.1bn GO for PPB Oil Palms shares via an exchange of 2.3 Wilmar shares for every 1 PPB Oil share. Excitement may also be focused on new oil & gas IPO listing, Kencana Petroleum while Favelle Favco announced a new AUD9.4m contract to supply 3 cranes. In other news, N2N Connect proposes a 1-for-1 bonus issue. With the market having suffered from profit taking for the last 3 days, we believe a rebound is crucial today to sustain momentum for the rest of the year. The new record level achieved by Dow Jones overnight also points in this direction. Failing this, the market may well take a breather for the holiday season before turning buoyant again next year. Support and resistance remains at 1073 pts and 1080 pts respectively.