KLCI up on plantation stocks ahead of Trump's speech

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KUALA LUMPUR (Nov 12): The FBM KLCI closed 1.58 points or 0.1% higher at 1,609.73 today, with Asian shares ahead of US President Donald Trump's trade policy speech and as Bursa Malaysia plantation counters rose.

Analysts said the KLCI had also closed higher on positive sentiment from Malaysia's improved wholesale and retail trade sales data for Sept 2019. At 5pm, the KLCI pared gains at 1,609.73, after rising to its intraday high at 1,614.21.

Malacca Securities Sdn Bhd senior analyst Kenneth Leong told theedgemarkets.com that the KLCI's increase was due to Malaysia's wholesale and retail trade sales data and strong trading interest seen in plantation counters, after crude palm oil (CPO) prices rose to a two-year high yesterday.

Today, Public Investment Bank Bhd analyst Chong Hoe Leong wrote in a note that Public Investment believes CPO prices may surpass RM2,800 a tonne in the coming months, due to the tightening of CPO supplies in global markets.

"This should be a boon to all plantation companies, after suffering from the poor CPO price performance over the last two years.

"It was a big boost to CPO futures, following a series of overwhelming numbers from the (Malaysian) October palm oil statistics. The palm oil inventories unexpectedly shrank 4.1% MoM to 2.3 million tonnes, as production started seeing a decline after peaking in Sept, while exports saw a strong recovery. At the point of writing, CPO futures rallied 2.1% to a 2-year high of RM2,628/mt. Since our upgrade on the sector outlook in early-Oct, CPO futures have rallied by more than 20%," Chong said.

Malaysia's Sept 2019 wholesale and retail trade sales grew 5.6% from a year earlier. Earlier today, theedgemarkets.com, quoting the Statistics Department, reported Malaysia's wholesale and retail trade sales grew 5.6% to RM110.6 billion in Sept 2019, from a year earlier, led by retail trade's 7.2% expansion.

It was reported that sales value of the wholesale trade and motor vehicle sub-sectors rose 4.7% and 4.4% respectively.

Across Bursa, turnover ended at 2.49 billion shares, valued at RM1.82 billion.

Top gainers included KLCI-linked plantation stocks: Sime Darby Plantation Bhd and Kuala Lumpur Kepong Bhd.

Sime Darby Plantation closed up 17 sen or 3.41% at RM5.15, after the stock's price jumped to its intraday high at RM5.18 in afternoon trades.

Globally, anticipation of Trump's crucial trade policy speech later on Tuesday, supported Asian stock market gains. Reuters reported Asian share markets edged higher on Tuesday and Europe looked set to follow, as investors awaited a speech by Trump on US trade policy and on news he will likely delay a decision on whether to slap tariffs on European autos.

It was reported that European Union (EU) officials said Trump was expected to announce this week that he was delaying the tariff decision on cars and auto parts imported from the EU, likely for another six months.

"The news boosted expectations about Trump's speech later in the day about his administration's long-running trade war with China," Reuters said.