KUALA LUMPUR (Dec 2): The FBM KLCI trimmed its gains at mid-morning on Friday, in line with the breather at the key regional markets, following the overnight dip at Wall Street ahead of the US employment data due out later in the day.
Asian stocks paused on Friday, a day after posting their biggest single-day rise in more than two months, as investors cashed in some gains and looked ahead to a key European summit next week for more progress on tackling the euro-zone debt crisis, according to Reuters.
The FBM KLCI was up 0.94 point to 1,486.20 at 10am.
Gainers trailed losers by 164 to 181, while 203 counters traded unchanged. Volume was 289.71 million shares valued at RM183.62 million.
At the regional markets, Japan’s Nikkei 225 was up 0.50% to 8,640.52.
Elsewhere, the Shanghai Composite Index fell 1% to 2,362.97, Hong Kong’s Hang Seng Index lost 0.32% to 18,941.52, Taiwan’s Taiex was down 0.43% to 7,147.70, Singapore’s Straits Times Index lost 0.47% to 2,749.00 and South Korea’s Kospi shed 0.04% to 1,915.33.
RHB Research in its third quarter earnings review said that looking forward, global economic conditions were still unusually fluid, and that the US economy was still struggling and the euro debt crisis is approaching a critical stage.
The research house said in a note Dec 2 that a series of measures had been introduced to avert a liquidity crunch, but not the underlying problems of insolvency and uncompetitive economies.
Whether the ECB will bow to market pressures and be a lender of last resort remains to be seen, it said.
Meanwhile, Eurozone economy had started to contract and without a growth strategy, the risk is a deeper and protracted recession, it said.
“In our view, investors may still be too sanguine on the damaging impact from the euro debt crisis and a deeper recession in the Eurozone would leave few countries unscathed,” it said.
RHB Research said that as a result, the local equity market would still be held hostage to external developments and will likely remain volatile.
“Given a number of significant risks in the horizon, we continue to ascribe a lower PE valuation of 13 times for the local market, translating into a FBM KLCI target of 1,430 for end-2012, slightly higher than our previous target of 1,385 on account of an upward revision in earnings.
“Given the challenging external environment, we continue to advise caution and prefer resilient and defensive stocks to ride through the volatility,” it said.
On Bursa Malaysia, Nestle was the top gainer at mid-morning and was up 60 sen to RM52.80; Dutch Lady gained 30 sen to RM24.70, Tradewinds PLANTATION []s 27 sen to RM4.19, KLK 22 sen to RM22.02, Panasonic 20 sen to RM19.94, Proton 17 sen to RM3.27, Petronas Dagangan 16 sen to RM16.78, HLFG 10 sen to RM11.68 and F&N added eight sen to RM18.10.
Decliners included Hong Leong Bank, Maybank, Public Bank, Atlan, Bumi Armada, Ekovest and IOI Corporation.
Meanwhile, the actives included Compugates, Sycal, MUI Industries, Wijaya warrants, MBF Holdings warrants and DPS Resources.
