Daily Commentaries 20th Dec 06

The KLCI closed 20 pts down, in tandem with the regional markets, after the Thai government imposed capital controls to curb speculation on the Baht. Vehicle sales fell for the 10th consecutive month in November as higher interest rates and stricter lending rules deterred buyers. Sime Darby has confirmed two things: (i) it is in negotiations with BMW to dispose-off its leasing arm and (ii) it had expressed an intention to the Government to take up an interest in Sarawak Hidro and take a lead role in a consortium for the proposed undersea cable project. Plans for a high speed train linking KL to Kuantan by 2015, under the proposed Kuantan District Locality Plan, may spur trading interest in construction stocks. For today, the abrupt U-turn by the Thai government to exclude equity investments from the restrictions could limit further downside on the regional bourses today. Meanwhile, Malaysia's government assurance that it will not implement capital restrictions to control the Ringgit should be well received by investors. The Dow hit another record close last night while wholesale prices and housing construction rose. Support for KLCI is lowered to the 1,049 level.