KUALA LUMPUR: Plantation stocks managed to retain their gains despite the overall market closing weaker and crude palm oil (CPO) prices falling for the first time in three days.

The plantation index closed 1.18% higher at 5,097.91 points, led by Kulim (M) Bhd, which gained 25 sen to RM6. Kuala Lumpur Kepong Bhd was up 20 sen to RM11.20, Kwantas Corporation Bhd put on 15 sen to RM2.09, while Sime Darby Bhd rose five sen to RM6.55.

IOI Corporation Bhd added eight sen to RM4.44, Sarawak Oil Palms Bhd six sen to RM2.42 and Asiatic Development Bhd two sen to RM4.96. United Plantations Bhd and Boustead Holdings Bhd remained unchanged at RM10.50 and RM3.66, respectively.
 
AmResearch said in a note it maintained an overweight stance on the sector as low inventory levels coupled with rising crude oil prices would sustain CPO prices. “We like bigger caps like IOI Corp and KLK. Among the smaller caps, we are positive on Asiatic Development and IJM Plantations Bhd.”

Based on the Malaysian Palm Oil Board (MPOB) report on May 11, palm inventory levels remained low, with April’s inventory falling 5.14% to 1.29 million tonnes, the lowest since April 2007, from 1.36 million in March.

CPO prices for July delivery, however, fell for the first time in three days, losing RM25 to RM2,660 a tonne on Bursa Malaysia Derivatives. A palm oil trader said CPO prices closed lower as market players had opted to close their long positions.

“Most market participants had expected inventory figures to fall lower to 1.2 million. So with April’s data at 1.29 million, players have opted to close position. We expect CPO prices to be range-bound this week, trading between RM2,600 and RM2,800 a tonne should tightness in supply remain,” she told The Edge Financial Daily via telephone on May 11.

The Kuala Lumpur Composite Index ended a marginal 1.28 points lower on May 11 at 1,025.5 points on late selling pressure. Gainers outpaced losers 448 to 362, while 196 counters traded unchanged. Trade was brisk with some 3.85 billion shares changing hands.

Based on Bloomberg data, the KLCI was trading at a price-to-earnings (P/E) ratio of 14.72 times, which was below its historical P/E of 15.63. KLCI’s P/E were 21-24 times during the bull markets of the 1980s and 1990s.

Key Asian markets were also mostly lower, with Singapore’s Straits Times Index down 3.22% to 2,166.1 points, and Hong Kong’s Hang Seng Index retreating 1.74% to 17,087.95 points.

Crude oil eased US$1.22 (RM4.29) to US$57.3 per barrel as at 6.18pm on the New York Mercantile Exchange after the recent surge last week.

Maybank Investment Bank technical chartist Lee Cheng Hooi pegged KLCI’s resistance between 1,037 and 1,064 points and support between 998 and 1,026 points. He said the support range should be “a very secure zone for bargain-hunting activities”.

“Since the current rise in the KLCI is flat, investors should not get caught at the end of this rebound move. The rebound could be of a sustained nature, but do not outstay the pseudo-bull’s welcome.

“There could be bouts of sporadic profit-taking but be prepared to buy on weakness, whilst disposing of some minor positions to lock in some short-term profits,” Lee said in a note.