Wednesday, August 10, 2011

KLCI snaps losing streak, AirAsia skids after tie-up

KUALA LUMPUR: MALAYSIAN AIRLINE SYSTEM BHD [] and AIRASIA BHD [], which have announced a tie-up, were among the most actively traded stocks on Wednesday, Aug 10 as the FBM KLCI staged a mild rebound in line with the advance at key regional markets.

Asian markets snapped their losing streak as Wall Street bounced overnight after the Federal Reserve's pledge to keep rates near zero for another two years.

The Fed said US economic growth was proving considerably weaker than expected and said inflation would remain contained for the foreseeable future.

The FBM KLCI added 16.11 points to 1,488.25 at 10.05am. Gainers beat losers by 616 to 71, while 139 counters traded unchanged. Volume was 491.02 million shares valued at RM762.86 million.

At the regional markets, Japan's Nikkei 225 added 1.15% to 9,047.05, Hong Kong's Hang Seng Index rose 2.92% to 19,895.65, the Shanghai Composite Index gained 1.38% to 2,560.80, Taiwan's Taiex was up 2% to 7,642.76, South Korea's Kospi added 1.76% to 1,833.03 and Singapore's Straits Times Index edged up 0.18% to 2,889.08.

MIDF Research in a strategy report Aug 10 said that based on empirical observations, the FBM KLCI's present year price earnings ratio (PER) generally ranged between 14-18 times during "peace" time and could slump to as low as 9 times at the depth of a "crisis" period.

'As we enter into a period of heightened uncertainty, we surmise that the market PER valuation shall accordingly be reflective of the situation. Hence we can expect the KLCI to end the year at the lower end of its peace time PER band of 14 times.

'At 14 times PER, our FBM KLCI year-end 2011 target is thereby revised downward to 1,430 points. The new KLCI target is 13.3% lower than our previous target of 1,650 points,' the research house said.

MAS was the most actively traded counter with 36.8 million shares done. The stock added 18 sen to RM1.78.

AirAsia, meanwhile, fell 31 sen to RM3.64 with 21.2 million shares traded.

Under a collaboration announced on Aug 9, Khazanah Nasional Bhd, which owns 69.5% in MAS, will take up a 10% of shares in AirAsia while Tune Air Sdn Bhd, which owns some 23% in AirAsia will hold 20.5% shares in MAS.

Although AirAsia and MAS officials said it was too early to estimate synergy gains as a result of the partnership, it is estimated that the tie-up can potentially save both airlines as much as RM1 billion annually.

Other actives this morning included Ranhill, Dutaland, Axiata, UEM Land, Bumi Armada and Iris Corp.

Among the gainers, Panasonic rose 68 sen to RM23.58, Perak Corp 35 sen to RM1.55, F&N 34 sen to RM18.34, Cocoaland 33 sen to RM2.23, BAT 30 sen to RM15.38, Tradewinds 27 sen to RM8.77, PPB 26 sen to RM16.90, Carlsberg 24 sen to RM6.92 and LPI Capital 22 sen to RM12.90.



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