Bursa Malaysia saw heavy trading last week as interest spilled over from the blue chips to lower liners and penny stocks. Volume surged to nearly two billion shares last Thursday, the highest since October 2007.
Trading in the 100 component stocks of the benchmark Kuala Lumpur Composite Index (KLCI) was also active, with 671 million shares changing hands last Thursday — a six-month high. This pushed the KLCI past the 960-point mark last week.
On Friday, the index closed at a six-month high of 965.17 points, gaining 21.27 points or 2.53% w-o-w.
However, dealers say the market’s uptrend is not sustainable as there is a lack of positive indicators.
“I doubt it is the beginning of a bull run as there are no indicators,” says Kaladher Govindan, head of research at TA Securities. “I think the KLCI will be supported at 938 points this week and face resistance at 969 points.”
The market continued to see privatisation deals last week as companies took advantage of lower valuations amid the current global financial turmoil.
Johor Corp Bhd, with subsidiary Damansara Assets Sdn Bhd, last Monday proposed to privatise its property arm Johor Land Bhd by offering RM1.55 a share for the latter. The offer will cost Johor Corp, which already holds a 74.85% stake in Johor Land, some RM90.1 million.
SRII Bhd’s major shareholder Eastern Perfection Sdn Bhd proposed last Friday to pay RM34.8 million, or RM1 per share, to minority shareholders in a plan to delist the company. SRII’s core business is to supply, install and service firefighting equipment.
Crude palm oil (CPO) prices also gained last week due to falling inventory. CPO for July delivery on the Kuala Lumpur Commodity Exchange settled at RM2,358 per tonne last Friday, up RM109 from RM2,249 per tonne the previous Friday.
CPO for June and May deliveries increased RM111 and RM70 per tonne to RM2,410 and RM2,500 per tonne respectively.
The money market however put in a flat performance last week. Ringgit traded at 3.6165 against the greenback last Friday, little changed from 3.616 the previous Friday.
Meanwhile, Bank Negara Malaysia’s governor Tan Sri Zeti Akhtar Aziz said the domestic economy is still growing while the global economy has yet to bottom out. She added that the central bank maintains the country’s GDP growth forecast for this year at between 1% and -1%.
Nevertheless, the Malaysian Institute of Economic Research said in a report that GDP will shrink 2.2% this year in the light of deep declines in the macro indicators, gloomy business and consumer confidence and dismal sectoral indices. It added that the central bank has room to cut interest rates to 1.5% or lower, from 2% at present, to boost the economy.
According to Human Resources Deputy Minister Datuk Maznah Mazlan, as at April 15, some 31,161 workers had been retrenched since October last year. Some 30,152 workers also saw their salaries reduced while 9,511 workers were laid off temporarily.
The Statistics Department said in February, the country’s Industrial Production Index fell 14.7% y-o-y and 3.7% m-o-m. The Consumer Price Index for March will be announced on April 22.
This article appeared in The Edge Malaysia, Issue 751, April 20-26, 2009