Monday August 3, 2009.

Friday Market Closing Prices.

FBMKLCI 1174.90 up 14.24.
October FCPO RM2,189.
Ringgit 3.5225.
DJIA 9,171.61 up 17.15 or 0.19%.
Crude Oil USD69.45.


WEEKLY STOCK MARKET OUTLOOK.

I was ABSOLUTELY SPOT ON in CONFIRMING our stock market had bottom out one week after our new Prime Minister YAB Dato Seri Najib Tun Razak took office in the middle of April when the Composite Index broke the consolidation trading range of between 860 to 940 level to close above the 950 level. The call is due to the positive effects of the massive concerted government intervention world wide especially from the United States government under new President Obama, the US$12 trillion fiscal stimulus and ultra low monetary policy to stem the tide against financial meltdown and economic recession or near depression and predicted the economy recovery will be long and winding road.

When confirming the stock market bottom, at the same time I immediately forecasted the stock market Kuala Lumpur Composite Index modest long term target of 1661 before the next General Election with this year KLCI target at 1200, 1331 in 2010 and 1525 in 2011. The long term forecast were based on improving economic numbers in Malaysia and globally and no more possibility of DEPRESSION outlook, low stock markets valuation going forward and by predicting the determination of BN government under the new leadership of PM Najib and also new US President Obama to do everything in their power to fix the respected country economics woes and win again during next General Election and US Presidential election in 4 years time.

* Please check my previous internet postings for verification.

Earlier in my Second Quarter 2009 Outlook, after the KLCI closed on March 31, 2009 at 872.55 from a low of 836, I still had my reservation about the sustainability of the stock market rally after the new BN government under PM Najib had suffered a set back due to the lost of 2 out of 3 seats in the 3 by-elections on April 7, 2009.

I had also earlier in the middle of 2008, been ABSOLUTELY SPOT ON with my call to SELL NOW when the CI was above 1230 level and BUY BACK BELOW 1000 LEVEL after the Federal Government increase the petrol price by 78 sen due to huge inflationary pressure to the Malaysian economy coupled with the rapidly deteriorating economic condition in the United States not to mentioned a very unstable political situation in the country too. Later on, I identified CI at 860 as a very strong support level.

I also had for the past weeks CONFIRMING our Malaysian economy to register a positive growth next year onward. The US economy had also showed a remarkable turnaround due to the fiscal and monetary stimulus together with the banking sector bailouts amid continue high level of unemployment. The latest 2Q 2009 GDP showed an annual contraction of 1% but 1Q 2009 GDP was revised to a deeper contraction of 6.4% had more or less CONFIRMED my stock market and economy views earlier.

M’sia’s latest economic numbers which were pleasantly positives such as last Thursday second quarter 2009 and June 2009 traffics figures for PLUS and MAHB and cargoes numbers for Malaysia Airports showed the contraction were halves, Bank Negara reported total loans growth to SME has gone up and the latest palm oil export figures for July which was up by 14%. Once again, I CONFIRMED our economy recovery is well under way. The numbers indicated that exports as our main Achilles Heel, are getting better as the price of commodities and E&E sector recover and I expected those sectors to show remarkable price recovery with the weakening of US Dollar and pick up in demand worldwide and resilience financial system.

So, for this week, the FBMKLCI is expected to test the 1200 level on the road to 1331 level as investors positioning based on forecast 2010 earnings growth of between 15% to 30%, faster M’sia and world economy recovery and also on possible further upside surprises on 2Q 2009 earnings for the remaining quarterly results due out anytime now.

STOCK MARKET STRATEGY.

Investors should continue to BUY and ACCUMULATE good quality stocks of FBMKLCI and the broader market especially during brief PROFIT TAKING at the minor resistance level and to TAKE PROFIT at key resistance level. Pick up stocks with good growth prospect, low valuations and defensively good dividend yield.

FBM KLCI TECHNICAL OUTLOOK.

Support Level at 1160.

Resistance Level at 1200.

Next Target Level at 1331, then at all time high of 1525.

Ultimate Target Level possibly before the next General Election at 1661.

STOCKS RECOMMENDATION.

Gamuda Bhd and WCT Engr. Bhd as their Joint Venture together with Sinohydro landed a new RM740 million Doha International Airport jobs and the total Contract Value now has increased from RM1.750 billion to RM3.272 billion. Both companies already had a sizeable order books going forward.

Moreover, Gamuda Bhd is expected to receive around RM600 million in cash from the sale of their 40% stake in SPLASH to Selangor state government.

Furthermore, plantation sector stocks are expected to move higher due to improving demand for CPO and rubber going forward as shown by the latest export numbers and current market prices as the global economy improve further.

Quality lower liners will also gets the players attention going forward.

HAPPY INVESTING FOR THE POSITIVE LONG TERM OUTLOOK.

For further inquiries please call:
Kamel Bin Mohd Yusoh.

Institutional Dealer.
Kenanga Investment Bank Bhd.
013-6306544 H/P and 03-21634549/40 (Office).