Tuesday, August 16, 2011

KLCI breaches 1,500-level at mid-morning

KUALA LUMPUR: The FBM KLCI breached the 1,500-level on Tuesday, Aug 16 in line with the generally positive sentiment at regional markets following the overnight rally at Wall Street.

Asian stock markets rose on Tuesday, following Wall Street shares which climbed for the third straight session on Monday, inspired by takeover news and better-than-expected Japanese data after a torrid July and August, according to Reuters.

Shares drew succour from news that Google has offered to buy Motorola Mobility Holdings Inc for about $12.5 billion, and that Japan's economy shrank less than anticipated in the second quarter, it said.

The FBM KLCI rose 9.20 points to 1,508.94 at 10am, lifted by gains at select blue chips.

Gainers led losers by 433 to 78 while 180 counters traded unchanged. Volume was 339.45 million shares valued at RM302.88 million.

At the regional markets, South Korea's Kospi jumped 3.72% to 1,859.99, Japan's Nikkei 225 rose 0.33% to 9,116.33, Hong Kong's Hang Seng Index added 0.36% to 20,333,69, Taiwan's Taiex gained 0.37% to 7,848.17 and Singapore's Straits edged up 0.33% to 2,883.85.

Meanwhile, the Shanghai Composite Index shed 0.32% to 2,618.32.

MIDF Research in a note Aug 16 that it was placing a 40% probability that the global economy will go into a recession next year.

The research house said it was downgrading Malaysia's 2011 real GDP growth to 4.5%.

'In a base case scenario, we expect 4.8% in 2012. In the worst case scenario, we may shrink by 0.9%. '''' Our year end KLCI target has been scaled down from 1,650 to 1,430,' it said.

MIDF Research said it had shortlisted 13 stocks that we expect to outperform the market if the economy goes into a downturn.

'The criteria for choosing the stocks are (i) price performance of stocks during the previous 2008/09 bear period, and (ii) stocks with no history of serious retracement (iii) uninterrupted dividend payments of at least 2.5%.

'The 13 stocks are Axiata, British American Tobacco, DiGi, Faber, JT International, KPJ Healthcare, Maxis, MSM, Nestle, Petronas Gas, TH PLANTATION [], Telekom & YTL Power,' it said.

Meanwhile, Maybank Invesment Bank Bhd head of retail research and chief chartist Lee Cheng Hooi said the FBM KLCI's resistance areas of 1,501 and 1,530 would cap market gains, whilst the obvious support areas were located at 1,454 and 1,499.

'Due to the US markets' rebound last night; we will see some volatile trading activities in the local bourse today.

'Some heavy profit-taking and liquidation activities will emerge later to depress the markets' rebound from its opening 'gap up' move,' he said in a note to clients.

On Bursa Malaysia, Nestle added 60 sen to RM48, Fima Corp and KLK 28 sen each to RM5.85 and RM21.50, Batu Kawan 26 sen to RM15.90, Tradewinds 23 sen to RM8.98, Petronas Gas and MMHE 22 sen to RM13.40 and RM6.74, IJM Plantations 19 sen to RM2.80 while Malayan Flour Mills and Esso added 16 sen each to RM7.74 and RM4.48.

DVM was the most actively traded counter with 25.6 million shares done. The stock added half a sen to 15.5 sen.

Other actives included Dutaland, Flonic, Olympia, AirAsia and Perdana.

Meanwhile, decliners included QSR, Advanced Packaging, Engtex and Biosis.

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