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Categories
| Midweek boost |
| Business & Market 2009 | |||
| Written by The Edge Malaysia | |||
| Monday, 20 July 2009 00:00 | |||
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The FTSE Bursa Malaysia KLCI (FBM KLCI) closed 12.02 points higher at 1,120.9 — an 11-month high — last Friday. The benchmark index was up 53.14 points or almost 5% from the previous Friday’s close of 1,067.76 points. Volume dropped to less than 551 million shares on Monday — the lowest level since early-April — as investors remained on the sidelines. This however changed midweek, volume shot up to 1.37 billion shares on Wednesday, bolstered by the better-than-expected earnings of some key US companies. Lower liners such as KNM Group, Iris Corp and SAAG Consolidated were actively traded, contributing to the heavy volume. Institutional buying of big caps, particularly banks and plantations, helped push the index up midweek. Investor optimism improved further as better-than-expected economic and earnings numbers were released. On Tuesday, Singapore announced that in 2Q2009, its economy had shrunk by a less-than-expected 3.7% y-o-y and expanded by an annualised and seasonally adjusted 20.4% from 1Q2009. The government also predicted that for the full year, GDP would shrink by a smaller 4% to 6% than the previously estimated 9%. China also saw an improvement in its 2Q2009 GDP numbers. Its economy grew at a faster clip of 7.9% in the quarter, well above the 6.1% growth registered in 1Q2009, spurred by massive government spending and a spike in bank lending. Apart from the positive economic data, top US firms also released better results. For example, Intel Corp’s earnings in 2Q2009 surpassed market expectations, as did those of Goldman Sachs. On the regional front, the Nikkei 225 ended higher at 9,395.32 points on Friday while the Straits Times Index rose to 2,430.96 points. The Hang Seng Index climbed to 18,805.7 points on Friday while Jakarta’s stock exchange ended the week lower at 2,106.35 points despite closing high on Wednesday because of the bombings in the city on Friday. For this week, K&N Kenanga Research’s head of research Yeonzon Yeow sees a correction in the market. “Investors will take profit on last week’s gains,” he says. “The market is not supported fundamentally by current economic conditions or corporate earnings. Uncertainty will continue to reign over when the global economy will recover.” “On top of that, last week’s gains were centred on big caps that are liquid, which allows investors to engage in trading strategy. Some foreigners are taking the opportunity to sell on strength and our advice to investors is to do the same — take profit,” Yeow adds. He puts the FBM KLCI’s support and resistance levels at 1,070 and 1,120 points respectively. “If the index breaks out of 1,120 on a sustainable basis, we are looking at resistance at 1,170 points,” he says. This article appeared in Capital page of The Edge Malaysia, Issue 764, July 20-July 26, 2009
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