KUALA LUMPUR (Jan 15): The PLANTATION [] sector may lead the local market rally this week, starting Monday, despite the worries about the downgrade of several European countries especially France.
Affin Investment Bank head of retail research, Dr Nazri Khan said the market may shift focus back toward Q4 corporate earnings and economic data.
He added equity markets may face a barrage of critical data which includes China Q4 GDP, US industrial production and inflation report and Bank of Canada’s interest rate statement.
“Given that there is a lot of liquidity sitting at the sidelines, any stronger than expected recovery in the economic data may bring huge inflow of liquidity which in turn could become the tsunami the market has been waiting for,” he said.
Nazri pointed out the plantation sector (which have gained an impressive 4.8% gain over the last two weeks) to lead the local market rally.
He added there was a strong resurgence of interest in plantation stocks such as KLK, Kulim, Genting Plantation, Sarawak Oil Palms, Rimbunan Sawit and Gleanely Plantation.
“If the pick-up in liquidity and the stirrings by selected blue-chips and frontliners are maintained - especially in the plantation and CONSTRUCTION [] sector - are any indication, our view is that the local market may actually be inching towards an early 2012 recovery,” it said.
However, he said on the negative front however, the direction of oil can still be a wild card on the current positive sentiment.
He advised investors should keep a close eye on the price of crude oil as there are tensions between the west and Iran over the latter’s nuclear ambitions threaten to destabilise oil supplies.
Nazri said any serious embargo on Iranian exports by the USA may produce retaliations which can hike up the oil price.
“Technically speaking, we see positive MACD, Stochastics and RSI as well as healthy average trading volume (above 1.5 billion shares) as indicating upside momentum and more accumulation next week.
“Finally, we see positive local newsflow to sustain the local sentiment,” he said.
Nazri said the following headlines to excite the markets which may include rumours on RHB and MBSB merger, Genting Group getting a casino licence in Miami, CIMB expanding big into Laos, MMC proposed privatisation of KTMB, AirAsia X expanding into Australia after withdrawing flights in India and Europe, TM bidding for digital television broadcasting, UEM LAND HOLDINGS BHD [] mega launch of RM5.5 billion of property projects and Sapura Crest US$100 million construction award in offshore Vietnam.
