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.