Daily Commentaries 16th June 2008

Due to a lack of key market-moving news from the local market, attention shifted to the performance of the U.S market last Friday. DJIA and S&P closed higher by over 1% while Nasdaq registered strong gains of more than 2%. The optimistic tone was established by lower crude oil which closed at USD1.90 / barrel last Friday. Stronger USD also helped fuelled the technical rebound. Technically, the KLCI is still at risk of re-testing the low of 1157.47 pts level as long as the market is still stuck in a downtrend. A dip below the immediate support of 1216 pts level would likely see the key index falling towards the 1157.47 pts level.

Daily Commentaries 13th June 2008

The KLCI was further pared down by 3.74pts yesterday in line with regional weakness. For today corporate news includes MAS looking to increase its fuel surcharge in 2 weeks, UEM selling 17.6 ha of land in Nusajaya to a West Asian investor for RM396.4m and unconfirmed news that UEM will also not be securing an automatic concession for the Second Penang Bridge which will instead be tendered out to the highest bidder. With US markets enjoying a modest rebound yesterday, we believe the current 1216 pts support level should hold. Resistance begins at the 1234 pts level.

Daily Commentaries 12th June 2008

The KLCI lost 1.7 points at 1229.28, weighed down by Genting, IOI Corp, Sime Darby, Public Bank and RHB Cap. Volume continued to be thin at 443m shares. Crude oil surged again last night, rising to $138 per barrel on weaker dollar as well as the US Energy Department’s report that oil inventory fell more than expected. This stoked inflation concerns and the Dow fell by more than 200 points. Headline news: Malaysian Prime Minister said there is no more petrol price hike this year, Asiatic Development entered into JV to develop 45k hectares of oil palm plantation in Central Kalimantan and Bina Puri secures RM81m contract to build condo in Bangkok.

Daily Commentaries 10th June 2008

The KLCI gave up most of the gains notched last Friday, closing 17 points lower following the sell –down on TNB which knocked 6 points off the index. Headlines today are in the form of higher costing for the 2nd Penang bridge, Yeo Hiap Seng being sued for an alleged breach of a distribution agreement and KUB sealing a ICT contract for schools in Selangor. The KLCI is still at risk of re-testing the low of 1157.47 pts level so long as the index is stuck in a downtrend. A dip below the immediate support of 1216 pts level would likely see the key index falling towards the 1157.47 pts level.

Daily Commentaries 9th June 2008

Key indices in the U.S market tumbled more than 3% last Friday as crude oil price registered the largest single-day price gain ever, closing at a new record. May unemployment rate in U.S which jumped to 5.5% from 5.0% also dampened buying sentiment. On the local front, Ranhill and LOSB Caymen Ltd. have launched a takeover for the balance 29.6% shares in Ranhill Utilities at RM3.50 per share. There was also rumours of Heitech Padu being taken private by PNB. Our bearish bias view towards the near-term market is maintained. The KLCI is still at risk of re-testing the low of 1157.47 pts level as long as the market is still stuck in a downtrend. A dip below the immediate support of 1216 pts level would likely see the key index falling towards the 1157.47 pts level.

Daily Commentaries 6th June 2008

While yesterday’s fall in the KLCI was expected, it may have been overdone. With US markets rebounding on better than expected retail figures and the relisting of TNB today, we may see a rebound on the market although upside will be limited. Initial resistance will be at the 1235 pts level. Corporate newsflow was thin as most companies chose to digest the news of the subsidy reduction announcements made by the Government yesterday. Petronas announced that it will pay about RM88bn less in gas subsidies over the next 22 years due to lower subsidies while Ramunia is on course to complete its MMHE deal. PanGlobal plans to sell its insurance business to Tokio Marine for RM15m while Ho Wah Genting has secured a 10 year tin mining certificate in Hulu Perak. The fuel rebates of RM625 and RM150 offered to car and motorcycle owners are a one-off rebate pending further deliberation. Finally, Mudajaya has secured a RM958m expressway contract.

Daily Commentaries 5th June 2008

The steep hike in petrol prices and unexpected hike in gas prices and flows though effect on electricity tariff and consequently inflationary pressures is likely to have an immediate knee jerk effect on the KLCI performance today. Key highlight of new fuel subsidy structure includes: Pump price has increased by 78sen, RM625 rebate for private vehicle registration up to 2,000cc and 2,500cc for pick up tucks, price of gas for the electricity sector will be increased to RM14.31mmBTu from RM6.40, allowing TNB to pass on the higher cost through tariff revision and IPPs and palm oil producers will be levied a 30% and 15% windfall tax respectively on profits above certain threshold indicators.

Daily Commentaries 4th June 2008

As expected, the market continues to slide in the absence of fresh leads as investors anxiously await the revelation of the new fuel subsidy scheme today. Other notable headlines are Petronas suing India’s Andani Energy for US$100m, Tenaga saying that it will not overpay for Genting’s power assets and a possible 5% windfall tax to be levied on IPPs. The country’s export growth for April also came in a stronger than expected 20.9% yoy due to higher shipments of crude palm oil and petroleum products. We would expect the market to range bound today with immediate support still at the 1260 level. The lower overnight close on the Dow should continue to dampen regional sentiment.

Daily Commentaries 3rd June 2008

The 1270 level proved to be a weak support for the KLCI which finished the day 13 points lower on renewed selling pressure. For today, the construction and building materials sector is likely to feel the pinch from the abolishment of ceiling prices for cement. The new subsidy scheme for fuel is set to be announced tomorrow with pump prices likely to be raised in August. CIMB also proposed a RM8.6bn merger of its banking units, Bank Lippo and Bank Niaga in Indonesia. Meanwhile, MAS is also biting the bullet on high fuel prices by implementing a slew of cost cutting measures that will take effect immediately. Other corporate headlines (i) Crest Builder inking a RM169m contract to build a service apartment and (ii) Pelikan to finalise potential acquisitions in China after 2008. Given unabated concerns on inflationary pressures and a barrage of negative news out of the US, the market may see further downside today with next support seen at 1260.

Daily Commentaries 2nd June 08

Stocks such as Gamuda and Berjaya Land which have major property developments in Vietnam faced strong selling pressure due to the country’s sharply deteriorating macro picture. Nevertheless, overall market sentiment was not affected as the KLCI still managed to find its way back above the key 1270 pts level. News on Fitch raising its foreign and local currency senior unsecured debt ratings on TNB from BBB to BBB+ on above-average recovery expectations could attract buying interests on the stock today. Another major corporate news is that LCL is close to securing the first few packages of a major fit-out project for Dubai’s Meydan Racecourse. Today, we will see if the KLCI could sustain above the 1270 pts level. If the key index can continue to trade at above this level, it would mean that last Wednesday’s breakdown was just a fake breakdown.