KUALA LUMPUR: Key regional markets shrugged off the weaker overnight close on Wall Street to close sharply higher, notching gains of more than 2%, while at Bursa Malaysia, plantation stocks led the KL Composite Index (KLCI) to a six-month high.

Markets started off on a cautious note, after the Dow Jones Industrial Average and S&P 500 fell on Wednesday following revived concerns about the US banking sector and the wider economy after Morgan Stanley posted its second straight quarterly loss and slashed its dividend.

European markets, which opened weaker, improved later in the day, as crude and metal prices supported commodity shares.

On key regional markets, Hong Kong’s Hang Seng Index surged 2.26% to 15,214.46 points, Japan’s Nikkei 225 advanced 1.37% to 8,847.01, South Korea’s Kospi rose 0.94% to 1,368.8, Singapore’s Straits Times Index added 0.9% to 1,859.98 and the Shanghai Composite Index was up 0.11% to 2,463.95.

On Bursa, the KLCI rose more than 1%, or 10.06 points, to close at 978.64, the highest since Oct 29, 2008. Trading volume was 1.37 billion shares valued at RM1.28 billion.

The positive sentiment was also reflected in the broader market where advancing counters beat decliners by more than four to one. Gainers thumped losers by 554 to 128 while 170 counters traded unchanged.

The market was also underpinned by gains in plantation stocks following a surge in crude palm oil (CPO) futures.

CPO contracts for July delivery jumped RM105 to RM2,580 per tonne, the highest since early September last year. Total volume rose to an all-time high of 33,490 contracts.

Analysts said investor sentiment was boosted by the liberalisation of the services sector announced by Prime Minister Datuk Seri Najib Razak on Wednesday, as well as on expectations of other measures to be unveiled later.

Counters that lifted the KLCI were Genting Bhd, Malayan Banking Bhd, Public Bank Bhd and Tanjong plc along with plantation counters, riding on the surge in CPO prices.

“People had underestimated the political succession effect. Expectations had been low but Najib has surprised with some positive news. The uptrend of the KLCI is in line with our earlier upgrade,” said CIMB Equities Research head Terence Wong.

Jupiter Securities Sdn Bhd head of research Pong Teng Siew said Najib’s gesture was significant in boosting market sentiment.

“Investors are trying to read into the measures announced in a positive manner, especially in light of future developments. Also, things are beginning to stabilise somewhat in economies like the US that could indicate that while the global economy might not have recovered, it is not regressing further,” he said.

Among plantation stocks, Kulim (M) Bhd gained 25 sen to RM5.55, Batu Kawan Bhd was up 15 sen to RM8.25 while BLD Plantation Bhd and Kuala Lumpur Kepong Bhd rose 10 sen each to RM2.98 and RM11.30, respectively. Kulim-WB rose 18 sen to RM3.02.

Other plantation gainers included Glenealy Plantations (Malaya) Bhd, Kluang Rubber Company (Malaya) Bhd, United Malacca Bhd, Boustead Holdings Bhd and Sime Darby Bhd.

Other counters which recorded gains were pipe manufacturer for the oil and gas industry, Wah Seong Corp Bhd, which rose 22 sen to RM1.82. KrisAssets Holdings Bhd added 21 sen to RM2.80.

Genting Bhd and Tanjong plc rose 20 sen each to RM4.72 and RM14.30 while Public Bank-foreign and Bursa Malaysia Bhd gained 15 sen each to RM8.55 and RM6.10.

Several companies in the Lion Group rose in active trade. Lion Industries Bhd added 11 sen to 99.5 sen, Lion Diversified Bhd 3.5 sen to 46.5 sen and Lion Corp Bhd five sen to 31.5 sen.

Opcom Holdings Bhd, which is controlled by Deputy International Trade and Industry Minister Datuk Mukhriz Mahathir, jumped 30% or 13.5 sen to 58.5 sen after it secured a RM359 million job from Telekom Malaysia Bhd. As of the latest records, Mukhriz had a 50.44% stake comprising 65.06 million shares in Opcom.

Binaik Equity Bhd was up 12.5 sen to 73.5 sen after the board agreed to a 75 sen selective capital repayment exercise.

On the CPO price trend, analysts said it was due in part to news reports that Russia could halve its imports of palm oil this year as it was doubling the import tariff on tropical oils to 10% from June 1.

CIMB Equities Research said Russia’s move to protect its domestic producers would be positive for CPO price in the short term as importers in Russia may accelerate their purchases of tropical oils ahead of the June 1 imposition.

It said this might boost short-term demand for palm oil and aggravate the current tight supply of the commodity in the key producing country. However, it said Russia’s demand for palm oil may drop in the second half after the higher import duties take effect.

The lower demand, together with a seasonal uptick in palm oil supplies, could boost palm oil stock level and lead to a correction in CPO price in the latter half of the year, said CIMB.  Its CPO price forecasts are RM1,950 this year and RM2,150 next year.

Inter-Pacific Research Sdn Bhd said it had revised its CPO price forecast upwards to average at RM2,300 per tonne from RM1,800 this year.

It said the sudden spurt in the CPO price yesterday could be a knee-jerk reaction to the Russian tariff hike, as buyers might want to accumulate stocks.

However, the research house said the impact from such a tariff hike was unlikely to affect CPO’s price competitiveness in Russia, as Malaysia’s exposure there was not very significant.

“We expect demand for CPO to pick up gradually in the second half, especially as we expect China’s economy to improve from 2H09. Also, CPO inventory levels will be going down due to lower production arising from tree stress, but this is cyclical,” it said.