KUALA LUMPUR: Can the October rally extend into November, after chalking up gains of 8.35% over the month and breaking through the psychologically important 1,500? Or is the rally losing steam?
Based on Bursa Malaysia stock market data, the FBM KLCI is up 114.3 points from Oct 3’s 1,367.52 to end 1,481.82 last Friday. For past week, the KLCI was up 30.9 points or 2.19%.
The October performance was the strongest since the selldown in late June, as investors picked up equities after European officials hammered out the €1 trillion (RM4.33 trillion) rescue package to mend Europe’s debt woes, especially Greece.
On Wall Street, stocks closed out a fourth week of gains in quiet fashion last Friday, edging higher as the market took a breather after rallying 3% on Europe’s deal to stem its debt crisis.
The Dow Jones industrial average gained 22.56 points, or 0.18%, to 12,231.11. The Standard & Poor’s 500 Index added 0.49 of a point, or 0.04%, to 1,285.08. The Nasdaq Composite Index shed 1.48 points, or 0.05%, to 2,737.15.
OSK Research director of research Chris Eng said it is possible although the rally does look as though it is running out of steam.
He said for the KLCI, the rally thus far has been quite steep although slightly lagging the global average.
On the outlook for Greece, he said Greece could avoid default in the short term.
“However, Europe is still faced with the problem of cutting deficits from almost everyone except Germany. The risk of a mild recession is still there,” he said.
As for investors, he remained “neutral” on the market and said investors should buy below 1,300 and sell above 1,533. Eng’s advice is for investors to remain defensive.
Affin Investment Bank head of retail research Dr Nazri Khan believes the KLCI is likely to trend higher this week on stronger global risk appetite following twin Europe-US catalysts last week.
He said the positive factors were the long awaited plan to resolve the European debt crisis and the stronger than expected US third quarter economic growth (registering the fastest quarterly GDP in a year).
“Going forward next week [this week], we expect investors to price in stronger US/European economy as well as the reduced banking crisis risk in both continents, pushing the KLCI to a possible 1,524 level (KLCI’s high made in 2008 before the subprime crisis),” he added.
Nazri said given the KLCI has gained 13% from its October low and MSCI Asia Pacific index has gained 8.1%, there were highly probable signs that intermediate bottom has been in place and the traditional year-end rally has started, which is likely to last till before Chinese New Year 2012.
He cited positive local corporate earnings (for example Public Bank Bhd, Malaysia Airports Holdings Bhd (MAHB), Supermax Bhd) and good average daily volume above one billion shares.
Nazri said there was across-the-board sectoral strength in the trading service, plantation and finance indices and weekly gains in economically-sensitive oil and palm oil to sustain the KLCI rebound in the near term.
“As for strategy next week [this week], we are recommending our investors to gradually accumulate blue-chip leaders especially those in the fast growth service sector (such as Genting Bhd, Media Prima Bhd, MAHB and AirAsia Bhd).
Among the stocks to watch today are Tenaga Nasional Bhd, Envair Holdings Bhd, SILK Holdings Bhd and Malayan Flour Mills Bhd (MFM).
TNB announced a 4Q net loss of RM453.9 million, the second consecutive quarter of losses, and expected the current financial year to be very challenging.
Though investors anticipated TNB would report losses, their concerns were whether it could work out the gas supply issue and a definite compensation from Petroliam Nasional Bhd (Petronas).
However, the lack of assurance from Petronas could weigh on the share price, especially after TNB president and CEO Datuk Seri Che Khalib Mohamad Noh said last Friday no decision had been reached as yet.
Envair has received a letter of intent from Zai Corporate Finance Ltd, an investment banking firm based in London, to subscribe for up to 30% of its new ordinary shares of 10 sen each at the market issue price.
SILK chairman Datuk Mohd Azlan Hashim has said he is confident the company would be able to return to profitability in a couple of years as traffic volume picks up for its tolled highway operations and an improvement in the marine support services.
Malayan Flour Mills could be getting ready for the next stage of growth, having announced a series of corporate exercises in May and signing an agreement in October that would see it step into the Indonesian market, according to The Edge weekly.
This article appeared in The Edge Financial Daily, October 31, 2011.
Based on Bursa Malaysia stock market data, the FBM KLCI is up 114.3 points from Oct 3’s 1,367.52 to end 1,481.82 last Friday. For past week, the KLCI was up 30.9 points or 2.19%.
The October performance was the strongest since the selldown in late June, as investors picked up equities after European officials hammered out the €1 trillion (RM4.33 trillion) rescue package to mend Europe’s debt woes, especially Greece.
On Wall Street, stocks closed out a fourth week of gains in quiet fashion last Friday, edging higher as the market took a breather after rallying 3% on Europe’s deal to stem its debt crisis.
The Dow Jones industrial average gained 22.56 points, or 0.18%, to 12,231.11. The Standard & Poor’s 500 Index added 0.49 of a point, or 0.04%, to 1,285.08. The Nasdaq Composite Index shed 1.48 points, or 0.05%, to 2,737.15.
OSK Research director of research Chris Eng said it is possible although the rally does look as though it is running out of steam.
He said for the KLCI, the rally thus far has been quite steep although slightly lagging the global average.
On the outlook for Greece, he said Greece could avoid default in the short term.
“However, Europe is still faced with the problem of cutting deficits from almost everyone except Germany. The risk of a mild recession is still there,” he said.
As for investors, he remained “neutral” on the market and said investors should buy below 1,300 and sell above 1,533. Eng’s advice is for investors to remain defensive.
Affin Investment Bank head of retail research Dr Nazri Khan believes the KLCI is likely to trend higher this week on stronger global risk appetite following twin Europe-US catalysts last week.
He said the positive factors were the long awaited plan to resolve the European debt crisis and the stronger than expected US third quarter economic growth (registering the fastest quarterly GDP in a year).
“Going forward next week [this week], we expect investors to price in stronger US/European economy as well as the reduced banking crisis risk in both continents, pushing the KLCI to a possible 1,524 level (KLCI’s high made in 2008 before the subprime crisis),” he added.
Nazri said given the KLCI has gained 13% from its October low and MSCI Asia Pacific index has gained 8.1%, there were highly probable signs that intermediate bottom has been in place and the traditional year-end rally has started, which is likely to last till before Chinese New Year 2012.
He cited positive local corporate earnings (for example Public Bank Bhd, Malaysia Airports Holdings Bhd (MAHB), Supermax Bhd) and good average daily volume above one billion shares.
Nazri said there was across-the-board sectoral strength in the trading service, plantation and finance indices and weekly gains in economically-sensitive oil and palm oil to sustain the KLCI rebound in the near term.
“As for strategy next week [this week], we are recommending our investors to gradually accumulate blue-chip leaders especially those in the fast growth service sector (such as Genting Bhd, Media Prima Bhd, MAHB and AirAsia Bhd).
Among the stocks to watch today are Tenaga Nasional Bhd, Envair Holdings Bhd, SILK Holdings Bhd and Malayan Flour Mills Bhd (MFM).
TNB announced a 4Q net loss of RM453.9 million, the second consecutive quarter of losses, and expected the current financial year to be very challenging.
Though investors anticipated TNB would report losses, their concerns were whether it could work out the gas supply issue and a definite compensation from Petroliam Nasional Bhd (Petronas).
However, the lack of assurance from Petronas could weigh on the share price, especially after TNB president and CEO Datuk Seri Che Khalib Mohamad Noh said last Friday no decision had been reached as yet.
Envair has received a letter of intent from Zai Corporate Finance Ltd, an investment banking firm based in London, to subscribe for up to 30% of its new ordinary shares of 10 sen each at the market issue price.
SILK chairman Datuk Mohd Azlan Hashim has said he is confident the company would be able to return to profitability in a couple of years as traffic volume picks up for its tolled highway operations and an improvement in the marine support services.
Malayan Flour Mills could be getting ready for the next stage of growth, having announced a series of corporate exercises in May and signing an agreement in October that would see it step into the Indonesian market, according to The Edge weekly.
This article appeared in The Edge Financial Daily, October 31, 2011.
