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.