Wednesday, November 9, 2011

KLCI closes higher, boost from Eurozone but worries linger

KUALA LUMPUR (Nov 9): The FBM KLCI extended its gains led by key blue chip stocks and positive sentiment from some developments in the Eurozone despite uncertainties from Italy.

The FBM KLCI rose 9.18 or 0.62% to close at 1,489.64, pushed up by key blue chip stocks including Axiata, Sime Darby and GENTING BHD []. Volume surged to 2.66 billion shares valued at RM1.808 billion. Gainers led losers 562 to 222, while 267 counters remained unchanged.

Key regional markets ended higher with Hong Kong's Hang Seng Index closing 1.71% higher at 20,014.43, Japan's Nikkei 225 up 1.15% to 8,755.44, Shanghai Composite Index 0.84% to 2,524.92, South Korea's Kospi up 0.23% to 1,907.53. Only Singapore's Straits Index closed down 0.19% to 2,861.17.

Later in the day, European stocks dropped on Wednesday following a short-lived rally that had been sparked by Italian Prime Minister Silvio Berlusconi's pledge to step down, as simmering fears over the country's debt pile kept investors on edge.

Global lender HSBC featured among the biggest losers, down 4.7% after posting a drop in underlying profits, hurt by lower investment banking income and a surge in bad debts in the United States.

At Bursa Malaysia, KLCI-linked stocks which provided the support were Axiata, up 13 sen to RM4.96 to push the index 2.54 points. Sime Darby added 12 sen to RM8.92 adding 1.67 points to the index and Genting 14 sen to RM11 to add 1.20 points to the index.

Dr Nazri Khan, head of retail research at Affin Investment Bank said: "The market will be well supported in the next few weeks due to lags in the market."

He said the immediate support levels for the KLCI should be sustained at 1,500 by the end of the week with the next support level at 1,450 for the next few weeks.

Volume, he said, will remain huge, in excess of one billion shares traded in as investor confidence returns to the market after recent fragile sentiments.

Nazri said developments in the Eurozone and China will be a great boost for the index.

"Main catalysts for this upbeat trend is the absence of the Greek referendum, the future resignation of Italian President Berlusconi and the anticipation of an easing of monetary policy in China as a result of the lowest recorded inflation in five months," he added.

At Bursa Malaysia, top gainers included Dutch Lady up 50 sen to RM21.00, BAT 40 sen to RM46.60, United PLANTATION []s 30 sen to RM17.88, and both NPC and Panasonic Malaysia up 24 sen to RM2.22 and RM19.36 respectively.

"Professionally speaking, I think that certain (big cap) stocks are a bit expensive, maybe that is why investors have turned to penny stocks," Nazri said.

He added that between November till Chinese New Year (typicaly in February) especially in Chinese dominated indices like Malaysia, Singapore, Hong Kong and Taiwan, he has seen a keen interest from investors in penny stocks over this period. "It's a sort of feel good factor," he added.

Harvest Court Industries rose 27 sen to fresh multi-year highs of RM1.45 and Harvest-WA 21 sen to RM1.26 in very active trade, prompting Bursa Securities to caution investors over the sharp increase in price and volume.

Emico jumped 19.5 sen to 39.5 sen and Emico-WA 23 sen to 30 sen in active trade. Hibiscus-WA added 5.5 sen to 47 sen with 161.97 million units done while the shares rose 19.5 sen to 39.5 sen.

Among top losers were Focus Lumber down 17 sen to 63 sen while F&N and Batu Kawan shed'' 8.0 sen each to RM17.44 and RM15.92 respectively.

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