Daily Commentaries 29th Jan 07

The correction late last week is viewed positively for the the market to build a temporary base in anticipation of further upside in the interim. BNM's move to keep interest rate steady at the first policy meeting of 2007 last Friday was expected and should have little impact on the market when trading opens. Major corporate headlines over the weekend include Goldman Sachs emerging as a major shareholder of Pelikan, Media Prima eyeing a stake in TM Net, Samling Group making a revised bid for shares of Lingui, Ramunia securing an EPCC contract at the Malaysia-Thailand Joint Development Authority Block and YTL Corp acquiring an Indonesia hotel operator. Also, Bonia has proposed a 1-for-2 bonus issue and share split pursuant to its proposed transfer to the Main Board and Proton may be looking to overhaul its dealership network. Meanwhile, news of fresh incentives for the REIT sector could spur some interest in REIT issues today. With the immediate support of 1170 broken last Friday, the new support for the KLCI now rests at 1160. However, we think the market is likely to recoup earlier losses given the continuing positive corporate news flows with resistance pegged at 1175.