Monday August 10, 2009.

WEEKLY STOCK MARKET REPORT.

Friday Market Closing Prices.
FBM KLCI 1184.88 up 0.91 or 0.08%.
October FCPO RM2,341.
Ringgit 3.5005.
DJIA 9,370.07 up 113.81 or 1.23%.
Crude Oil US$70.93 down US$1.01 or 1.40%.

STOCK MARKET OUTLOOK.

FBM KLCI is set to test the 1,200 level again this week after touching intra day high of 1191 last Friday but closed at 1184.88.

This is on the back of positives global and local economic numbers . The latest job cuts in the U.S has slowed down considerably and the unemployment unexpectedly falls from 9.5% to 9.4% in July as the recession eases. The report showed the number of unemployed fell slightly to 14.462 million from 14.729 million in June.

On the corporate front, Fannie Mae, the largest provider of U.S home mortgage funding, on Thursday reported a US$14.8 billion quarterly net loss that it said would force it to go to the US treasury a third time for money to stay in business.

Meanwhile, the Chinese official said they will scrutinize stocks gains but won’t cap loans as money floods the economy.

Locally, Malaysian latest exports number numbers especially more than 5% rise from the previous month provided the latest indication that the economy is on the mend.

On the job market front, the government is assisting 307,214 individuals, including 133,214 graduates, in finding employment through the labor department’s JobsMalaysia portal, said Human Resources Mininster.

Furthermore, ICT job boom offers more silver lining as about 100,000 ICT related jobs are expected to be created by 2010 despite the current economic climate.

The international reserves of Bank Negara Malaysia fell marginally to RM321.5 billion as at July 31 from RM321.7 billion on July 15. The reserves position is sufficient to finance 8.9 months of retained import and is 3.8 times the short term external debt.

Moreover, our local corporate news flows has been flooded with news of new contracts being awarded. The latest, Kencana Petroleum Bhd RM2.00, BUY rating, has won a RM46 million contract from Houston based Newfield Peninsula Malaysia Inc for the fabrication and procurement of jacket and topside for the West Belumut wellhead platform. The contract is expected to be delivered in stages within the first quarter of 2010.

Construction company, Bina Puri Holdings Bhd RM0.90, BUY rating, has won a RM50.91 million contract to complete the foundation and substructure up to ground floor slab for the proposed 13 storey Plaza Merdeka commercial complex and hotel in Kuching, Sarawak from Rakyat Elite Sdn Bhd. With the latest award, the group’s order book order stands at RM2.35 billion inclusive of RM1.1 billion new projects secured this year.

Master Builders Association Malaysia said the local construction industry is expected to maintain revenue of RM60 billion this year. The last four quarters have been slow for the sector but going forward more tenders will be called.

The next catalyst for the stock market will be government contracts to build the extension to the current LRT system, the new low cost carrier terminal in KLIA besides the contracts to build schools, hospitals, roads, highways and other infrastructure projects.

The better than expected earnings so far and further upside surprise on the upcoming quarterly results will provide added impetus to the stock market rally and to finally break the 1200 level.

STOCK MARKET STRATEGY.

Investors should continue the same proven strategy of BUY and ACCUMULATE FBM KLCI stocks and all the stocks on the recommended BUY list with a long term view that FBM KLCI will test the previous all time high of 1525 on the way to a modest target of 1661 the latest by year 2011 or before the next General Election.

This is in tandem with a forecast GDP growth of at least 3% in 2010 and at least between 5% to 6% in 2011. Meanwhile, the expected earnings growth for the next 2 years of between 15% to 30% will provide the necessary strong fundamentals backing based on low valuations for the FBM KLCI at that level.

We also encourage the investors to TAKE PROFIT at key resistance level and BUY BACK at support level.

FBM KLCI TECHNICAL OUTLOOK.

Support level at 1160.
Resistance at 1200.
Next Target at 1331 level.
Than , the previous all time high target level at 1525.

FOR FURTHER INQUIRIES PLEASE CALL KAMEL BIN MOHD YUSOH, KIBB, AT 03-21634549/50 OR 013-6306544.