Monday May 11, 2009.

WEEKLY MARKET REPORT.

Friday Markets Closing Prices.

KLCI 1026.78 up 3.31.

DJIA 8,574.65 up 164.80 or 1.96%.

Crude Oil US$58.63 up US$1.92.

July FCPO RM2,685.

Ringgit 3.5150.

STOCK MARKET OUTLOOK.

Reiterated BUY on the Malaysian stock market that had reversed into an UPWARD TREND from a downward trend when KLCI easily broke a very formidable resistance at 920 level accompanied by a very heavy volume on April 10, 2009 as forecasted in my internet posting dated Sunday April 19, 2009 (KLCI 965.17) and Sunday 12, 2009 (KLCI 941.38).

The latest Malaysia trade figures for March, the U.S banks stress tests results last Thursday and better than expected U.S unemployment report last Friday were the latest evidence that the worst part of the recession has ended.

Moreover, with the world's government taking the leading role in ensuring speedy economic recovery, the global stock market will continue to lead the way well in advance in a recovery process in the months and years ahead.

The Best Case Scenario for KLCI based on above the forecast 1Q 2009 companies results that has been announced so far by the KLCI component stocks and other Bursa Malaysia listed companies such Tenaga Nasional Bhd, Public Bank Bhd, BAT (M) Bhd, Shell (FOM) Bhd and F&N Holdings Bhd, coupled with the economy recovery investment theme, has the potential to hit 1331 level by year end 2009 and then testing the all time high of 1524 by the middle of 2010 and possibly hitting the all time high at 1661 by the end of 2010 as the world economic and stock market recovery gather momentum.

This scenario is certainly supported by an undemanding valuations such as low Price to Earnings Ratio, low Price to Net Assets Value, attractive Dividend Yield commensurate with the risks and low Non Performing Loans outlook for the banks. Please refer to my internet posting dated Thursday April 10, 2009 on the "Malaysian Stock Market Outlook for 2nd Quarter 2009" that showed a single digit and very low Price to Earnings Ratio forecast for 2009 on quite a number of the Kuala Lumpur Composite (KLCI) 100 stocks and a very high dividend yield. For year 2010 onward, the valuations going to be more attractive as the economic recovery is now in place.

This is after taking into consideration Malaysia GDP forecast for this year of between a contraction of -1% and a growth of 1% but a positive GDP growth of between 4% to 5% together with improving global economic growth from 2010 onward. The growing economy than will be translated into a healthy double figure earnings growth for the listed companies of at least 15% to 30% or more after a contraction in earnings this year.

Furthermore, the unprecedented determination and cooperation of the Malaysian Government and between the world's government in order to get out from this global "Great Recession" through a worldwide concerted effort of an ultra low monetary policy and a massive injection of money into the systems to stimulate demand through fiscal stimulus plan has somewhat mitigated the downturn and expected to show positive results in the later part pf this year onward. This actions has resulted in a massive liquidity driven stock market rally worldwide too.

Therefore, I forecast our economy recovery is sustainable and the stock market confirmed is trending upward due to a very stable political outlook in the country under the leadership of new Prime Minister Y.A.B. Dato Seri Najib bin Tun Abdul Razak, at the very least until the next 13th General Election less than 4 years from now. After that, provided the Barisan Nasional can win the 13th General Election, the stock market upward trend can still continue based on the country's economic prosperity and political stability.

ECONOMIC NEWS.

Even though Malaysia's exports in March continue to fall in year to year terms but at a slowing pace of15.6%, the trade figures have been growing on a month to month basis, the latest up 10.3% in March, and it is also the country's 137th consecutive month of surplus since November 1997, RM12.5 billion surplus in March. The prices and volume of our products exported are suffering, as seen in the petroleum and palm oil (prices are half of last year's levels). The trend of prices has firmed up, but they are still at low levels. As the world economy recover, the prices and volume of our products exported will recover too. The commodities and crude oil prices will recover not only because of increasing demand but also due to the continuing weakening of U.S. Dollar as the U.S fiscal stimulus and financial system rescue efforts flooded the world financial system with the greenback.

The recent Malaysian Government financial liberalization plans, Bursa Malaysia plan of merging the Second Board companies into the Main Board, more relax listing and fund raising requirements; and positive corporate news flow such as takeover plan will provide further impetus and act as a catalysts for further stock market rally.

The latest reports from the United States indicated that evidence is piling up that the worst part of the recession has ended but that doesn't mean the pain is over. The economy remains vulnerable to further shocks, and 13.7 million people are unemployed. The jobless rate rose to 8.9 percent and headed for above 10 percent level. Yet confidence is building that the recession will end this summmer or fall setting the stage for a slow recovery. The economy is still shrinking in the current quarter but only at about half the pace.

The U.S Fed says unemployment will remain elevated into 2011. Economists say the job market may not get back to normal - meaning a 5 percent unemployment rate - until 2013. If laid off workers who have given up looking for new jobs or have settled for part time work are included, the unemployment rate in April 2009 would have been 15.8 percent.

Still, a string of reports out last week suggested the recession is finally starting to lose its bite and the economy is stabilizing. A recovery is now in sight and we can definitely see "light at the end of the tunnel".

Hopefully, the next step after the economy has recover are the structural reforms of world financial system and tighter regulations will be put in place to prevent the relapse of present financial and economic cathastrophe.

STOCKS RECOMMENDATION.

STRONG BUY on Bursa Malaysia listed companies especially the KLCI 100 stocks.

Please checks all the previous internet posting for details on individual stocks recommendations and stocks picking.

Word of Advise and Caution - Please do your home works and double check all the figures before investing in the stock market.

TECHNICAL OUTLOOK.

SHORT TERM AND LONG TERM BULLISH AND UPWARD TREND.

Any market pullback is an opportunity to ACCUMULATE quality stocks.

KLCI Target Level - 1331, 1524, 1661.

KLCI Support Level - 1000, 980 to 960, 920, 880 to 860.

For further inquiries please call:-

Kamel Bin Mohd Yusoh.

Institutional Dealer.

Kenanga Investment Bank Bhd.

013-6306544 or 03-21634549/50.