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.