Daily Commentaries 7th Dec 06

With volume surging to 2.2bn shares, blue chip stocks rallied to bring the KLCI briefly to the 1100 pts level before easing slightly. Nonetheless, the broader market was less bullish with profit taking emerging on lower liners. Today’s headlines include MAS reviewing its fares to be more flexible, Naza confirmed as being keen to take up a stake in Proton whose partners will only be revealed in 1Q2007 and details on Malakoff acquisition of a 20% stake in Oman’s Dhofar Power Co. On the broader Malaysian economy, 2 oil refineries are expected to be set up in Yan, Kedah while Malaysia will be signing an MOU with Brunei, Indonesia and Philippines which would liberalise the aviation sector between the countries. Tesco would also be buying Makro’s stores in Malaysia while Seagate would be investing US$200m in its Penang operation over 5 years. As such, the headlines are all generally bullish and will likely sustain momentum in blue chips. Nonetheless, we advise caution on the broader market sentiment as profit taking may continue on lower liners. The US market closed down yesterday on concerns over tech stocks and some profit taking. Support and resistance levels remain at the 1080 and 1100 pts levels.