February 28, 2007

Daily Commentaries 1st Mar 07

With the global fall in stock markets, the KLCI was no exception, down over 100 pts at its lowest before recovering to post a 40.6 pts drop. For today, we continue to advise caution on the market as the high volume yesterday, close to 4bn shares, would seem to indicate that selling pressure may not be completed exhausted. Nonetheless, we believe that selling by foreign institutions has resulted in some key blue chip companies becoming attractive bargains at current prices and investors should monitor these closely to determine the right entry price. For corporate news today, the Transport Minister said that Malaysia wants a more liberal aviation agreement with Singapore although the open skies policy does not appear up for discussion. Mobile Number Portability may be introduced by next year. On a broader arena, Malaysia’s GDP figures came in within expectations while Chinese Government officials denied plans to levy capital gains tax on stocks. With the US markets rebounding as the US Federal Reserve Chairman reassured investors that the economy will continue growing, it will be crucial to monitor the key support level of 1170-1190 pts to decide whether or not to bargain hunt.

February 27, 2007

Daily Commentaries 28th Feb 07

The KLCI and regional bourses took a tumble yesterday on worries over US recession and the spillover effect of the introduction of a capital tax gains in China. Several results announced last evening were Maxis, Kulim, Nestle, Proton, PLUS and Maybulk. Headline corporate news includes Singapore’s statement that it would conduct "suitability checks" on two Genting group firms which won a bid to operate the city-state's second casino, warning that they would not automatically qualify for a casino licence. Meanwhile, UBG clarified that it was "not aware" that the EPF was planning to offer it about RM2.3bn for its stake in RHB. The market may be jittery today as the Dow fell more than 500 points on concerns of the slowing down of the US and China economies and that share prices have become overinflated. Immediate support now stands at 1,223 points with resistance at 1,250 points level.

February 26, 2007

Daily Commentaries 27th Feb 07

The market took a breather yesterday as investors lock-in gains after the strong rally last week. In terms of key results announced last night, MAS was slightly below expectations while KNM, Dialog and Tong Herr were in-line. Notable business headlines today includes BNM keeping the OPR steady at 3.5%, Sime Darby to develop a 23.8ha land in Mont Kiara into a multi-billion Ringgit residential, office and commercial development, Tenaga planning to hive-off its Indonesia coal asset while Petronas buying gas from three offshore fields operated by Murphy. Given very little upside surprise on the results front coupled with crude oil prices holding above the US$61 per barrel weighing on the US markets, sentiment on the market may be capped. Immediate resistance is seen at 1283 with support at 1258.

February 25, 2007

Daily Commentaries 26th Feb 07

The KLCI showed another good performance last Friday, breaching the 1,278 support to close 6.95 points higher. Major corporate news for today includes the extension of TM and TNB’s CEO contract for three years, UEM’s detailed plans for the development of Nusajaya and MAS’ ‘Project Firefly’, which plans to use Penang as the new domestic and regional operation to service the premium travel market. Nonetheless, the local bourse should be encouraged by Telekom’s heartening FY06 results while the disappointment in Star Cruises numbers may have a negative impact on Resorts World. The market would be warming up for the release of the 4Q06 GDP and CPI numbers this week. However, the slide in the Dow last Friday as well as the rebound in oil prices may dampen sentiment. The KLCI’s resistance now stands at 1,300 points with support at 1,278 points.

February 22, 2007

Daily Commentaries 23rd Feb 07

As expected, the market retraced yesterday inline with declining US markets although volume reached another record high. For today, the Government has denied it has influenced the significant rise in the KLCI of late. Positive corporate news comes in the form of Bumiputera-Commerce’s 3.4% placement to Bank of Tokyo-Mitsubishi UFJ at a 17% premium to its previous closing price and IOI’s planned expansion of its plantation business with a war chest of RM2.2bn. Zelan announced another RM2bn power plant in Indonesia while Protasco announced it had been awarded a road maintenance contract in Libya for RM128.1m. Dialog is buying a UK technology provider while Guthrie is selling its MDF plant for RM145m. Finally, a Berjaya Land JV has secured rights to develop a US$350m property development project in Vietnam. With enough good news in the form of new contracts for today, the market may stage a rebound to attempt a close above the 1278 pts level although we think that significant gains maybe difficult given the overnight fall in US markets. Support is now at the 1265 pts level. Oil prices which closed at their highest since the start of 2007 may raise fears of inflation again.

February 21, 2007

Daily Commentaries 22nd Feb 07

On the first trading day after the CNY holiday, the market rallied ahead with gainers outnumbering losers by more than 7 to 1 and volume breaking the 4bn shares mark. News for today is in the form of Linde’s takeover offer for the remainder 55% stake of MOX which it does not own at RM15 per share. Maybank’s results were below expectations although it did report a modest growth for 1HFY07. IJM has been awarded a contract for the development of airside infrastructure at the Senai airport for RM145m, PSCI announced 3 ship building contracts worth US$42m while Leader Universal has also won a contract, jointly with MKCSS Holdings, to develop a 200MW power plant in Sihanoukville, Cambodia. January vehicle sales also dropped from a year ago. Finally, MTouche is proposing a 4-for-1 bonus issue and a private placement exercise. The mixed bag of news coupled with the overnight fall in European and US markets on renewed fears of inflation may mean that further gains on the local bourse may be hard to come by. The 1278 pts support level will be crucial to determine if the market can sustain its current momentum in the short term although the longer term uptrend looks intact. Below 1278, the next support level would be at 1265 pts while the next resistance would be the 1300 pts resistance level.

February 15, 2007

Daily Commentaries 16th Feb 07

The market did not disappoint in terms of a CNY rally, running up another 12.99 pts on a record 3.5bn shares being traded although market breadth was not too positive with gainers outnumbering losers by only a 5:4 ratio. Big news is Petronas’ announcement that it will begin work on its Kimanis oil & gas terminal in June 2007 while Protasco announced a RM45m LOI to build a teacher’s training college in Penang. Among the notable results announcement last evening were Transmile’s and BAT’s excellent set of numbers. Although profit taking is imminent, the strong market sentiment as well as the Dow’s record close last night and slipping oil prices may continue to boost the local market. The market is now looking at the 1,278 pts resistance level before the upcoming CNY holidays.

February 14, 2007

Daily Commentaries 15th Feb 07

Ahead of the CNY festival next week, the market put in a broad based rally after a few days of correction with volume breaking the 2.8bn shares mark. Today’s corporate news focuses on Ranhill which is executing Phase 2 and 3 of its RM5.6bn Libyan housing construction project and SP Setia which is selling land worth RM107m in Pulai. RHB provided more details of its plans to sell RHBCap shares back to its shareholders while Green Packet and YTL-e are tipped to win 2 WiMAX licenses. In terms of results, Magnum 4D’s was a disappointment while Ann Joo’s and Digi’s strong growth show that the expected surge in corporate profits can indeed be achieved. The Government will decide soon on Malaysia Airport’s restructuring plan including its proposals to increase airport taxes. KNM announced a JV with a leading US technology firm to provide EPCC services for biodiesel plants in South East Asia and Oceania. With the US markets rallying overnight on the US Fed’s comments that inflation is controlled, we expect another good day today. Resistance is now positioned at the 1250 pts level followed by the 1278 level.

February 13, 2007

Daily Commentaries 14th Feb 07

The KLCI rebounded in the second session to close 2.44 points higher yesterday. Topping corporate results last night were IOI Corp, IOI Plantation and Titan’s stellar results as well as AMMB and Star’s numbers, which came in within expectations. Meanwhile, KFH maintained that it is not increasing its offer for RHB. DRB-Hicom plans to assemble more models in its Pekan plant and Pos Malaysia is investing RM200m to set up a new National Mail Processing Centre by 1Q09. Big aluminium companies may be the next in line for consolidation as mining conglomerates scour the globe for targets. Speculation is building that a mining giant could bid to buy Alcoa or Alcan, triggering a surged on the Dow overnight. The local bourse may continue to be weak with selective bargain hunting ahead of the long weekend. Support remains at 1,218 while resistance is pegged at 1,240.

February 12, 2007

Daily Commentaries 13th Feb 07

Lower liners and laggards continue to dominate trading interest with blue chips pulling back for the second day. Overall market breadth was negative with the number of losers outpacing gainers 2-to-1 as trading volume contracted to 1.5bn versus the 2.7bn record last Friday. In terms of results, Petronas Gas came in above, Amway was in line while Tek Seng disappointed. In the news today, Khazanah is in advance negotiations with UEM World to acquire some 2,000ha of land in Johor while MRCB has secured a RM282m contract to build transmission lines for TNB. MAS also said it is on track to post a second consecutive quarter of profit while Multi-Purpose revealed it is not aware of a 10% stake reported to have been acquired by tycoon, Quek Leng Chan. US markets closed weaker overnight as investors fret over disappointing deal news and uncertainty over Fed Chairmans’s speech to the Congress later during the week. We think the KLCI may drift further before attempting a recovery. Support now moves to 1218 while resistance is pegged at 1240.

February 11, 2007

Daily Commentaries 12th Feb 07

Attention shifted to second liners and laggards as blue chips took an expected breather after the recent rally. Key headlines out of the weekend include AMCORP emerging as a substantial shareholder of ECM Libra, TNB confirming on-going discussions with Sime Darby on the undersea cable project, Sime Engineering's subsidiary clinching a contract to build a process platform, utility platform and three bridges offshore Qatar. Ramunia has received the letter of award for the RM307m EPCC contract at the Malaysia-Thailand Joint Development Area while Petra Perdana has placed-out a 10% stake in the company to HL Company Management for RM2.75/share. Genting is also mulling the possibility of selling- off non-gaming assets. Meanwhile, Ornasteel results came in ahead of our expectations although below consensus estimates. On the US front, observers expect the Dow to push higher this week on the back of positive economic data. Locally, the record underlying volume should see the broader market maintaining its positive vigour ahead of the Chinese New Year. Immediate support and resistance levels remain at 1240 and 1250 respectively.

February 8, 2007

Daily Commentaries 9th Feb 07

The bulls came back in the afternoon trade to push the KLCI forward towards its 1250 pts resistance level on a day of record trading volume. In terms of results released yesterday, YTL Power reported decent growth while F&N was flat. Tan Sri Quek Leng Chan emerged as a substantial shareholder of Multi-Purpose Holdings after buying a nearly 10% stake from Magnum. The US-Malaysia FTA talks are continuing with contentious issues likely to be avoided. Puncak Niaga will be suspended from Feb 15th to facilitate its capital repayment while Malaysia Airports is considering setting up a LCCT in Penang. On the overseas front, US markets closed slightly down on concerns over its housing sector while Oil price closed back above US$60 per barrel as a fire shut down a major Californian oil field. Blue chips may take a bit of a breather today with attention shifting more towards lower liners and laggards in the market. Resistance remains at 1250 pts followed by the 1278 pts level while support is at 1236 pts.

February 7, 2007

Daily Commentaries 8th Feb 07

Plantation and banking stocks helped the KLCI notch another close to 7 point gain yesterday with volume hitting a record 2.35bn shares mark. Positive sentiment appeared to be spreading with gainers outnumbering losers although the second board still lost ground. Big news today would be RHB Cap confirming that it has received an offer from EON Cap to acquire its entire business for the equivalent of RM4.80 per RHB Cap share while shareholder RHB has received a counter voluntary offer from EON Cap for all its shares at RM1.80 per share. Sanbumi provided further details of its business collaborations with airlines flying between Malaysia, Taiwan and Cambodia. Alam Maritim has received an RM18.1m LOI from Talisman to charter 1 of its anchor handling vessels while Coastal Contracts received MOAs worth RM243m for the sale of 7 offshore vessels over the next 2 years. AirAsia expects AirAsia X to start its services by September while its CEO’s private ventures, Tune Money and Tune Hotels are also expected to be launched soon. With all this positive newsflow, we feel that the market may continue its march ahead today towards the next resistance level of 1250 pts while support moves to 1226 pts.

February 6, 2007

Daily Commentaries 7th Feb 07

KLCI continued its march upwards, closing 10.9 points higher on the back of heavy trading volume. Ringgit rose to the strongest in nine years after BNM clarified that it was not targeting any specific exchange rate levels. RHB continues to garner headline news. The Utama Banking Group is believed to have accepted a RM2.2bn offer from KFH to gain control of RHB. Other corporate news today are the award of RM113m worth of work for KNM and Kencana’s RM39m contract to build an offshore platform and structures. Meanwhile, DRB Hicom has clarified that it is not selling its stake in EON to EPF and AirAsia denied media speculation that it planned to raise money in a right issue. With the bullish performance over the past 3 days and the upcoming CNY holidays, profit taking is imminent. Nonetheless, the corporate results season this month is not likely to give any major signal to the KLCI. Resistance and support remains at 1,240 and 1,209 respectively.

Quote Of The Day

You have to learn the rules of the game. And then you have to play better than anyone else.

Albert Einstein

February 5, 2007

Daily Commentaries 6th Feb 07

Despite the overbought conditions, the KLCI forged ahead to close another 16 pts up into uncharted territory. Extended programmed buying by foreign funds swamped blue chips with notable index movers coming in the form of Genting, MISC and IOI Corp. Call warrants remained the flavour of the day for retailers. RHB is again in the news today with KFH unveiling plans to create a world class Islamic Bank via a RM12bn investment while UBG is slated to meet as early as today to consider the concerted bid by EPF and EONCAP. WCT is also set to clinch a RM1.5bn job in the United Arab Emirates, boosting its order book to RM5bn. Meanwhile, EPF has declared 5.15% dividend for 2006. With the near 30 points gain over the past 2 trading sessions, there is still the likelihood of a breather although the bulls will continue to hold the upper hand given the current bullish environment. Resistance and support are pegged at 1240 and 1209 respectively.

February 4, 2007

Daily Commentaries 5th Feb 07

The market powered 20 points ahead last Friday to close at a new 10 year high bolstered by heavy foreign buying on blue chips such as Genting, TM and Maybank. Volume traded came in at 1.47bn shares valued at RM3.7bn. Weekend headlines include EPF likely to declare a 5.3% dividend for 2006, Zelan bagging a RM939m contract to build a 850MW power cum integrated water desalination plant in Saudi Arabia and EPF locked in talks with Tan Sri Syed Mokhtar on DRB's stake in EON Capital. MAS is also looking at the possibility of lower fuel surcharges following the drop in oil prices. Also in the news this morning are the launch of Amanah Raya’s RM336m REIT, MAHB introducing new incentives for airlines in May and TNB asking for a 10% hike in energy prices in Thailand. The stronger than expected gains chalked last Friday raised the certainty that the KLCI will be headed for profit-taking when the market opens today. We think this is only healthy after the outstanding rally over the past 2 weeks. Immediate support is pegged at 1200 with resistance capped at 1245.

February 1, 2007

Daily Commentaries 2nd Feb 07

The KLCI marched ahead on the final day of January racking up another 7.93 pts of gain to close just shy of the 1190 pts level. This brings its total gains since the start of 2007 to 93.11 pts, a sterling achievement for the Malaysian market. For the month of February we should likely see more such action continue ahead of the Chinese New Year although there may be some profit taking today after 3 days of gains. Unconfirmed sources stated that Kuwait Finance House plans to spend RM4.4bn to acquire Utama’s Stake in RHB Capital. Transportation related news also seems to be the flavour of the day with Scomi Engineering’s acquisition of a further 40% stake in its 51% owned subsidiary, MTrans while Fajar Baru secured a RM28.7m contract from KTM for staff quarters and a training school in Perak. Hubline is acquiring a 50.2% stake in another shipping company, Highline Shipping SB for RM86.6m. On the results front, Bursa Malaysia reported stronger results while Murphy’s deepwater gas find offshore Sabah may spur Oil & Gas stocks. Overall, attention may still remain on bluechips with both Telekom Malaysia and MAS having launched campaigns on Jan 31 to increase their customer base. Resistance is now at the 1192 pts level while support moves to the 1180 pts level.