Monday, May 18 2009.
WEEKLY MARKET REPORTS.
Friday Markets Closing Prices.
KLCI 1014.21 up 2.22.
DJIA 8,268.64 down 62.68 or 0.75%.
Crude Oil US$56.34 down US$2.28 or 3.89%.
August FCPO RM2,613.
Ringgit 3.5450.
STOCK MARKET OUTLOOK.
The stock market will trade with a downside bias after the 200 points run up from March low of 837 to recent high of 1037. Investors are anticipated to take profits after considering that the latest political development in Perak, the Federal government decision to raise petrol prices by 20 sen starting September 1, 2009 for RON 97 and replacing RON 92 with RON 95; and a confirmed case of A(H1N1), swine flu, in Malaysia will further weaken the already fragile state of economic recovery.
Moreover, a disappointing results during current reporting season that are still underway from companies such as IOI Corp Bhd, Media Prima Bhd, Unisem Bhd and MISC Bhd showed the extent of the global recession affecting the Malaysian companies and will have some bearing on the market direction in the near term.
However, the stronger than expected first quarter 2009, January to March period, earnings for Malaysian banking sector such as BCHB Holdings Bhd, AMMB Holdings Bhd, Affin Holdings Bhd and previously Public Bank Bhd, are quite reassuring to investors that our financial system are in a pretty good shape despite an anticipated increase in non performing loans for the banks in the coming months as the recession take its bite.
The Malaysian and world economy are expected to bottoming out in the 2nd half of the year or at least by year end 2009 because of a low base and the economy to begin a real meaningful recovery in the 2nd half of 2010.
With this backdrop, the WORST CASE SCENARIO for KLCI is around 860 to 880 level. Anything below this level for KLCI are considered as an absolute bargains and the market too is not expected to trade below last year low of 801. A 10% market pullback will bring the KLCI to around 920 to 937 level from a high of 1025 to 1037 level. For this week, 1000 and between 980 to 960 level on the KLCI will provide a strong support for the market and a good level to continue accumulating quality stocks.
Meanwhile, the world stock markets are also in a consolidation mode as the US market average DJIA probably will undergo a 10 percent or more correction from a high above 8,500 level to around 7,700 to 7,600 level or lower as the current valuation doesn’t justify the market to go up any higher without any meaningful pullback even as the latest economic number such as the Consumer Confidence Index rose and showed that the economy is in a process of bottoming out.
STOCKS RECOMMENDATION.
BUY plantation related stocks on price weakness.
Reiterated BUY call on Sime Darby Bhd, RM6.55, as the federal government has assured them assistance to develop the RM7.5 billion Eagle Cove project in Pantai Kok, Langkawi. The project will cover 160 ha and would take 10 years to develop. The project would be developed in four phases including a hospital, residential area, resort, convention centre and commercial complex.
On top of that, Sime Darby Bhd recently made a scientific breakthrough – the sequencing, assembling and annotation of the oil palm genome and its bold target of doubling productivity by using the results of its genome project.
TECHNICAL OUTLOOK FOR KLCI.
Target level – 1331, 1524 and 1661.
Support level – 1000, 960 to 980, 950, 920, 860 to 880.
WEEKLY MARKET REPORTS.
Friday Markets Closing Prices.
KLCI 1014.21 up 2.22.
DJIA 8,268.64 down 62.68 or 0.75%.
Crude Oil US$56.34 down US$2.28 or 3.89%.
August FCPO RM2,613.
Ringgit 3.5450.
STOCK MARKET OUTLOOK.
The stock market will trade with a downside bias after the 200 points run up from March low of 837 to recent high of 1037. Investors are anticipated to take profits after considering that the latest political development in Perak, the Federal government decision to raise petrol prices by 20 sen starting September 1, 2009 for RON 97 and replacing RON 92 with RON 95; and a confirmed case of A(H1N1), swine flu, in Malaysia will further weaken the already fragile state of economic recovery.
Moreover, a disappointing results during current reporting season that are still underway from companies such as IOI Corp Bhd, Media Prima Bhd, Unisem Bhd and MISC Bhd showed the extent of the global recession affecting the Malaysian companies and will have some bearing on the market direction in the near term.
However, the stronger than expected first quarter 2009, January to March period, earnings for Malaysian banking sector such as BCHB Holdings Bhd, AMMB Holdings Bhd, Affin Holdings Bhd and previously Public Bank Bhd, are quite reassuring to investors that our financial system are in a pretty good shape despite an anticipated increase in non performing loans for the banks in the coming months as the recession take its bite.
The Malaysian and world economy are expected to bottoming out in the 2nd half of the year or at least by year end 2009 because of a low base and the economy to begin a real meaningful recovery in the 2nd half of 2010.
With this backdrop, the WORST CASE SCENARIO for KLCI is around 860 to 880 level. Anything below this level for KLCI are considered as an absolute bargains and the market too is not expected to trade below last year low of 801. A 10% market pullback will bring the KLCI to around 920 to 937 level from a high of 1025 to 1037 level. For this week, 1000 and between 980 to 960 level on the KLCI will provide a strong support for the market and a good level to continue accumulating quality stocks.
Meanwhile, the world stock markets are also in a consolidation mode as the US market average DJIA probably will undergo a 10 percent or more correction from a high above 8,500 level to around 7,700 to 7,600 level or lower as the current valuation doesn’t justify the market to go up any higher without any meaningful pullback even as the latest economic number such as the Consumer Confidence Index rose and showed that the economy is in a process of bottoming out.
STOCKS RECOMMENDATION.
BUY plantation related stocks on price weakness.
Reiterated BUY call on Sime Darby Bhd, RM6.55, as the federal government has assured them assistance to develop the RM7.5 billion Eagle Cove project in Pantai Kok, Langkawi. The project will cover 160 ha and would take 10 years to develop. The project would be developed in four phases including a hospital, residential area, resort, convention centre and commercial complex.
On top of that, Sime Darby Bhd recently made a scientific breakthrough – the sequencing, assembling and annotation of the oil palm genome and its bold target of doubling productivity by using the results of its genome project.
TECHNICAL OUTLOOK FOR KLCI.
Target level – 1331, 1524 and 1661.
Support level – 1000, 960 to 980, 950, 920, 860 to 880.
For further inquiry please call :-
Kamel Bin Mohd Yusoh.
Institutional Dealer.
Kenanga Investment Bank Bhd.
013-6306544 or 03-21634549/50.
17 May 2009.
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