Friday 29 Mar 2024
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KUALA LUMPUR: Selling pressure has accelerated on Bursa Malaysia, with the small cap and penny stocks, which had been actively traded in recent weeks, seeing profit taking in recent days.

Can the KLCI hold above the 1,050 level on June 19, especially after the KLCI recorded the biggest one-day loss since March 30? Sentiment has taken a blow, based on the weak broader market and all the top active stocks in the red.

Total market capitalisation was reduced by about RM16 billion to RM804.95 on June 18 itself.

However, market sentiment will hinge on how the US markets perform and the fresh economic data pointing to whether there is a recovery.

On the fundamental economic perspective, Standard Chartered Global research said in note on June 18 that looking ahead, in 2009 and possibly 2010; direct investment inflows would likely remain subdued due to weak demand from the developed world.

"China could become a new source of direct investment in the years to come, but is unlikely to be a potent force in the near term.

"In terms of portfolio investment, there have been some early signs in Q2-2009 that foreign investors are re-entering selected ASEAN markets as risk appetite improves and bargain hunters regain confidence in the region's economic and currency outlook," it said.

However, the research house said this hinged on whether there were further signs of stabilisation in the region's economies, portfolio inflows could return to the region in 2H09 and 2010, though the size and distribution of such flows among regional markets are difficult to predict.

Standard Chartered Global research said there are two areas of concern for authorities. Such capital inflows, alongside current account surpluses in most ASEAN economies, could put upward pressure on Asian currencies, which could prompt intervention by local authorities to limit volatility and curb excessive strength.

"Furthermore, as we anticipate the recovery in ASEAN economies in 2010 to be modest and subdued, such capital inflows could lift asset valuations above fundamentals.

"Prevention of asset bubbles should be a key objective of ASEAN central banks as they devise exit strategies from loose monetary policy in the medium term," it said.

Stocks to watch include, IJM Corp, LFE Corporation, WCT, Kencana Petroleum, CB Industrial Product Holding (CBIP) and SP Setia.

IJM Corporation Bhd, via its 70:30 joint venture with LFE Corporation,has received a letter of acceptance for a RM303 million contract from Tamouh Investments LLC in Abu Dhabi.

The contract involves completing Package 1 of the Zone E2 Hotel Development on the, Al Reem Island.

CBIP has secured contracts from Wilmar International to build three palm oil mills valued at USD$12.8 million.

WCT has expressed interest to construct the RM2 billion new low-cost carrier terminal (LCCT) in Sepang. As of March this year, WCT's order book of RM2.9 billion was sufficient to last until end-2010 while it has cash of about RM650 million.

Meanwhile, Kencana has secured a contract from PCPP Operating Company Sdn Bhd to fabricate offshore platform facilities. The total contract value is RM35 million and is expected to be fully completed by third quarter of 2009.

The contract comprises provision of engineering, procurement and fabrication of offshore wellhead platform structures and facilities. The Contract forms part of PCPP's gas field development project located offshore Bintulu.

Meanwhile, SP Setia reported net profit of RM40.52 million for the second quarter compared with RM48 million a year ago. Revenue was RM310.48 million compared with RM301.5 million. It declared five sen dividend per share.

As for Ingress Corp, it is seeking an EGM with holders of its RM160 million Sukuk Al-Ijarah to be held  on July 2 as it seeks to extend the maturity date of the Islamic papers.

Ingress said that it issued the delay notice to enable it to prepare a restructuring plan as the first tranche of debt papers would mature on July 9.

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