The benchmark Kuala Lumpur Composite Index (KLCI) crossed the 900-point level last week — the first time since February — boosted by early signs that the worst may be over for the global economy and a smooth power handover at home.
The KLCI rose a mere 1.94 points to close at 907.01 points last Friday, but on a week-on-week basis, it gained 21.58 points or 2.44% from 893.95 points a week earlier, thanks to the rally last Thursday that saw the KLCI adding 20.89 points intra-day.
TA Securities’ technical analyst Stephen Soo says the global stock market may gain further as major world economies, whose leaders recently gathered at the G20 summit, are coming up with more new measures to tackle the global economic crisis.
“In Malaysia, the power handover has brought some positive sentiment to the market, hence there could be more upside. But this could turn out to be a bear market rally unless it is sustained over an extended period,” he says, pegging the immediate support level for the KLCI at 890 points and resistance level at 920 points.
The changing of the guards in Putrajaya dominated local news last week. Datuk Seri Najib Razak was sworn in as Malaysia’s sixth prime minister last Friday, taking over from Tun Abdullah Ahmad Badawi, who stepped down after leading the country for over five years.
Meanwhile, Domestic Trade and Consumer Affairs Minister Datuk Shahrir Abdul Samad resigned from the Cabinet last Wednesday.
On the international front, major world leaders at the G20 summit in London — a gathering of the world’s 19 largest national economies plus the EU — agreed on a trillion-dollar deal to combat the deepest economic downturn since the Great Depression. This was amid negative data showing that the US jobless rate had climbed to its highest level since 1983, to 8.5% in March.
Even as the local equity market rose last week, the ringgit strengthened last Friday, appreciating to 3.58 against the greenback from 3.61 the previous week.
However, Standard Chartered plc said last Thursday that the ringgit may drop 3.4% to a level last seen in February 2006 on concerns that a slump in exports will erode the current account surplus. It added that the ringgit may weaken to 3.75 against the US dollar by June 30 before recovering to 3.55 by the end of the year.
Crude palm oil (CPO) prices also rose last week. CPO for June delivery on the Kuala Lumpur commodity exchange settled at RM2,165 per tonne last Friday, up RM175 from RM1,990 the previous Friday. Meanwhile, CPO for May and April deliveries increased RM180 and RM169 to RM2,230 and RM2,281 per tonne respectively.
In another development, TM International Bhd last Thursday launched a new identity for the group, changing its name to Axiata Group Bhd. It paid RM2 billion or half of the amount owed to Telekom Malaysia Bhd last Wednesday, ahead of schedule. The remaining RM2 billion will be repaid by the end of this month.
Meanwhile, CIMB has offered its 36,000 employees across its offices in the region the option to take no-pay leave for up to six months due to overcapacity in the current downturn.
Going forward, Malaysia’s Industrial Production Index will be announced on April 9.
On the political front, three by-elections will be held in Bukit Selambau, Bukit Gantang and Batang Ai on April 7.
This article appeared in The Edge Malaysia, Issue 749, April 6-12, 2009