May 29, 2008

Daily Commentaries 30th May 2008

The KLCI closed largely flat yesterday despite the strong GDP numbers reported. For today, with US markets only up slightly but declining oil prices, we feel that the local bourse could face further selling pressure. Bumiputra-Commerce is suspended until Tuesday pending an announcement related to the merger of its Indonesian subsidiary, Bank Niaga with Khazanah owned Bank Lippo. Ramunia secured a RM35m contract by Sarawak Shell while Protasco won a RM81m road maintenance contract in Libya. With the mixed bag of results announced yesterday, the KLCI could well head towards its 1240 pts support level.

May 28, 2008

Daily Commentaries 29th May 2008

The KLCI lost 13 points at 1260, falling through the 1271 minor support. Losers beat gainers 2 to 1 on razor thin volume of 400m. Major losers dragging the KLCI lower were Sime Darby, IOI Corp, Maybank, Genting and TM. Corporate news: other than a slew of quarterly financial results, newsflow was thin. 1Q GDP beat forecast, Bank Negara relaxed foreign currency loan, Ireka was given investment certificate in Ho Chi Minh to carry out construction works.

May 27, 2008

Daily Commentaries 28th May 2008

The KLCI continues its range bound trading amid external uncertainties and weakness in regional sentiments. Volume was thin at around 433m shares. On the global front, US consumer confidence in May plunged to its lowest in 16 years. Corporate newsflows include Genting rumoured to be selling its power assets while bagging a new PSC in Indonesia, IOI Group’s executive director of finance, Datuk Yeo How’s resignation and Tenaga planning to buy back as much as 10% of its stock. Additionally, Sunrise is believed to be acquiring Wisma Angkasa Raya for a record deal. Technical-wise, immediate resistance remains at the 1305 pts level and support at the 1270 pts level followed by the 1240 pts level.

May 26, 2008

Daily Commentaries 27th May 2008

It was another case of a cautious start for the local market after oil prices hit US$132 per barrel last Friday and the Dow taking another beating that culminated in the broader but somewhat restrained sell-down on the local bourse yesterday. The KLCI closed a tad weaker at 1273.37 BNM has kept the OPR unchanged at 3.5% while HeiTech landed a RM20m ICT job from the government. Initial works for the takeover of 4 companies involved in water distribution and production by the Selangor State government has been completed with pricing being the the next hurdle to overcome. In terms of results, both Proton and Kulim registered strong quarterly numbers. On balance, with US markets closed, we would expect the KLCI to extend its range bound trading pattern with concerns still on oil. The index should oscillate within the support and resistance zones of 1270-1305.

May 25, 2008

Daily Commentaries 26th May 2008

Following the failure to crack above the 1300/05-resistance area last week, the KLCI has retraced and is in the midst of testing the 1-month low of 1271.42. A breach of which could see the index trying to fill the previous downside gap of 1267.65. In view with the completion of double-top pattern of the 13-day RSI, we reckon the aforementioned scenario is highly probable. As for notable corporate news today, it was reported that Kencana could be getting a RM500m fabrication contract and IJM clinched a RM490m rail deal. We would expect the KLCI to extend its sideways momentum.

May 22, 2008

Daily Commentaries 23rd May 2008

The fall in the market was again somewhat muted at 3.63 pts as compared to the steep overnight drop on the Dow the previous night. Volume was thin below 500m shares and we expect the situation to worsen next week with the school holidays. With oil retreating from record highs, US markets closed slightly positive yesterday and our local bourse may take a cue from this. Nonetheless, we expect the KLCI to remain rangebound still between 1271 and 1305 pts. Key news items include the Government stating that the higher income group will need to pay more for subsidized items soon, including fuel. On the corporate front, PDZ announced it was buying a ship for US$14.3m and Bina Puri will be developing property in Sabah worth RM24.8m. Aside from that, results announcements dominate the newsflow.

May 21, 2008

Daily Commentaries 22nd May 2008

Despite the sharp fall on the Dow, the KLCI lost just 6 points at 1281 in thin trading of just 531m shares. For the whole of May, the KLCI has been trapped within the 1271 – 1305 range. The direction of the range breakout will determine the short-term direction. Crude oil surged past US$133 on weak supply data and dollar’s weakness resulting in the Dow falling by 227 points. Corporate news: Kosmo Technology Industrial served with letter of demand for RM27.5m by Kuwait Finance House, Global Carriers disposed off a tanker vessel for RM12.3m, Asiatic Development completed the first draft of its palm oil genome sequencing, MMC said there is no cost overrun in its double-tracking rail project.

May 20, 2008

Daily Commentaries 21st May 2008

Global inflationary woes, continued domestic political uncertainty and lackluster regional sentiments finally took a toll on the KLCI’s performance, which retraced by more than 1% or 13.04 points yesterday. Renewed consumer concerns in the US following a set of weaker then expected results and guidance from Home Depot and SAKS, coupled with surging oil prices added to the already weakening global economic sentiment. Dow Jones 1.5% overnight decline could weigh on the KLCI’s performance today. Domestic corporate news today includes: Ramunia losing the Indian oil contract after it failed to provide necessary project financing guarantee, Kulim plans to takeover Sindora suffered a setback after its independent adviser advised shareholders to reject the offer of RM1.72/share, MMM has signed an agreement to charter four new chemical tankers in a RM280m deal and Transmile defaulting on its bond repayment of RM213m. Technical wise, look for an immediate resistance at the 1305 pts level followed by the 1313 pts level, while support remains at the 1270 pts level followed by the 1240 pts level.

May 19, 2008

Daily Commentaries 20th May 2008

The market finally broke the 1,300 level on selective blue chip support although trading volume remained thin. Key headlines over the long weekend and this morning are the RM15bn investment in Iskandar Malaysia by India- based builder, BSEL, Sime Darby indicating that the Bakun undersea cable project hasn't been delayed while Wijaya Baru has signed a MOU with the Vietnamese authority to bid for infrastructure projects worth US$3bn. Confirming earlier speculation, Intel Capital has inked an agreement with Green Packet which will see the former investing RM50m in the form of convertible bonds. On the political front, Tun Dr. Mahathir has decided to quit UMNO to the surprise of many. EON Capital also revealed a decent set of 1Q numbers. With little by way of fresh leads, the upside on the market could well hinge on the current reporting season where investors would assess the performance of key heavyweights in light of the economic challenges. With the immediate resistance breached, the next resistance is seen at 1313.

May 15, 2008

Daily Commentaries 16th May 2008

The KLCI remained stuck below the 1300 pts resistance level yesterday with no major market moving news. For today, the rumour mill seems to be going into overdrive with media reported rumours of Intel potentially buying a minority stake in Green Packet and Boustead Heavy Industries close to clinching a RM200m contract to build a barge. Boustead is offering RM5.50 a share to take Boustead Properties private. News that might affect Sime Darby includes the IMPSA compensation claim for Bakun being termed excessive by the Deputy Finance Minister. Other Government related news includes the Transport Minister saying he will look into the current competition between AirAsia and MAS and the Plantation Industries and Commodities Minister saying that Malaysia may consider swapping palm oil for rice. Coastal Contracts secured a RM201m contract to build 2 offshore vessels while Petra Energy secured a RM50m contract from Felda for palm oil mill boilers. We expect the market to remain rangebound for today given the long weekend ahead. The 1300 pts resistance will remain key.

May 14, 2008

Daily Commentaries 15th May 2008

The KLCI rose as high as 1296 but was not able to sustain its gains and closed near the low at 1287. Nevertheless, market breadth was positive with gainers beating losers at 371 to 313. Steel stocks continued to attract buying attention following the recently announced liberalization. Among the corporate news, Maybank registered a marginal drop in quarterly earnings, MAS extends its “Everyday Low Fare” to Asean countries and China, Boustead Holdings to take Boustead Properties the details of which will be announced today, Key ASIC was selected as the design service partner of high performance video scaling and processing chips for Silicon Valley-based Anchor Bay Technologies, Quill Capita Trust buys property in Penang from IJM Properties for RM132m.

May 13, 2008

Daily Commentaries 14th May 2008

The KLCI closed lower, led by profit taking on plantation stocks. Technical wise, the market has not completely closed down the massive “downside gap” ranging from the 1243 pts level to the 1296 pts level. Hence, immediate resistance remains at this gap. An additional resistance is seen at the 1313 pts level. To the downside, continue to look for an immediate support at the 1240 pts level. Corporate news today includes: MISC seeking more time to complete the due diligence on its Ramunia acquisition, Ircon International has won the contract to build, design and maintain the RM3.4bn rail project, Mudajaya has secured a RM15m contract and TM said it will invest RM1.9bn over a period of 10 years for broadband infrastructure in the Iskandar Development.

May 12, 2008

Daily Commentaries 13th May 2008

The Bursa Malaysia currently exhibits a 2-tier market situation. For instance, PBBANK has recorded a new all time high of RM12.00 while TIME is hovering around its all time low of RM0.215. For the KLCI per se, the index is in the midst of testing the 1300/05-resistance area especially with the help of overnight Wallstreet performance. Nonetheless, the weakness on crude oil could post some selling pressure on oil and gas as well as plantation stocks. Besides, the below-than-consensus results of MISC could possibly drag the performance of KLCI. As for corporate news, KUB Power bags a RM22.5m job and TMC Life to expand its operation in Indonesia.

Daily Commentaries 12th May 2008

Technically speaking, the KLCI is still in a consolidation mode. The technical indicators have yet to show any conclusive trading signals at the moment. Should the KLCI prove able to hold above the 1275/65 immediate support area, the KLCI could re-test the immediate resistance area of 1300/05 in the near-term. However, due to the weak closing of WallStreet in last Friday night, we do not rule the KLCI to temporary stage a mild correction in the beginning of the week. Apart from the US and regional market performance, we also believe the performance of KLCI also hinge on crude oil’s movement. A strong crude oil performance could fuel the performance of oil and gas as well as plantation stocks that collectively accounted for about 30% of KLCI market cap.

May 9, 2008

Daily Commentaries 9th May 2008

The KLCI succumbed to selling pressure yesterday alongside regional markets after the overnight fall on Wall Street, For today, RHB Cap resumes trading after its suspension for the 25% stake acquisition by Abu Dhabi Commercial Bank at RM7.20 per share, Malaysia Airports reported strong growth in passenger numbers for March and Digi plans to expand its presence in rural areas targeting 10m new subscribers. With US markets largely flat overnight, we see the KLCI also trading rangebound with resistance at the 1300 pts level.