Smooth handover boosts sentiment

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KUALA LUMPUR: The smooth handover in the Umno presidency, with Datuk Seri Najib Razak now in charge, and a rally in major Asian indices with gains of between 1% and 3.97% lifted blue chips in the local market yesterday.

Analysts said the perception of stability in the country’s largest political party helped galvanise investor sentiment in the equity market, despite Bank Negara Malaysia’s cautious economic outlook.

Better-than-expected US indicators also signalled that the global economy may be bottoming out, analysts said. The MSCI Asia Pacific Index rose 1.5%. Having rallied 21% from a five-year low on March 9, some fund managers believed that the market was in a bottoming process.

The KL Composite Index (KLCI) rose 0.76% or 6.66 points to 885.47. Turnover was 656 million shares valued at RM881 million. Advancing counters beat decliners 339 to 128 while 203 stocks were unchanged.

Singapore’s Straits Times Index rallied 3.97% to 1,758.79, Hong Kong’s Hang Seng Index advanced 3.57% to 14,108.98 and Japan’s Nikkei 225 rose 1.84% to 8,636.33.

Despite yesterday’s rally, most key Asian indices were still down year to-date with the Hang Seng Index 1.94% lower, Nikkei 2.52% and Straits Times Index 0.16% but the KLCI was up 1% from the beginning of the year.

Crude palm oil (CPO) third-month futures closed near a five-month high of RM2,035, up RM63. On Monday, it rose to RM2,030.

Analysts said there was also some rebalancing of portfolio among fund managers in the local bourse ahead of the first quarter closing on March 31.

Jupiter Securities Research head Pong Teng Siew said there was some window-dressing and expected the upward trend to continue into next week.

“We are seeing most of the large-cap stocks moving up, especially those which had been very quiet,” he said.

Pong said there was not much change in fundamentals but there was as improvement in investor sentiment following the more positive external economic data.  

The positive factors included some stability seen in US markets, underpinned by new home sales and durable goods reports.

These positive data hinted that the markets might have hit a bottom while sentiment was also reinforced by the US government’s plan to resolve the toxic assets in the financial system.

TM International Bhd, which was battered on Wednesday after announcing the pricing of its rights issue, staged a recovery, rising 10 sen to RM2.39.

Resorts World Bhd jumped 14 sen, the most since October, to RM2.19. It was the most active stock with 81.21 million shares done.

The counter received a boost from a HwangDBS Vickers Research report. The research house maintained a buy on Resorts at RM2.05 as the market was pricing its resilient gaming business at only 6.9 times 2010 price-to-earnings (ex-cash).

Genting Bhd added 18 sen to RM3.86, British American Tobacco (M) Bhd gained 25 sen to RM45.50 and Bursa Malaysia Bhd increased 20 sen to RM5.25. Among banking stocks, Malayan Banking Bhd gained 12 sen to RM4.38 and Public Bank Bhd five sen to RM7.45.

Infrastructure stocks IJM Corporation Bhd rose 12 sen to RM4.28, Gamuda Bhd eight sen to RM2.03 and WCT Bhd five sen to RM1.11.

Among plantation stocks, IOI Corporation Bhd rose two sen to RM3.98, Kuala Lumpur Kepong Bhd was unchanged at RM10.70 while Sime Darby Bhd eased five sen to RM5.80.

However, stocks like Scomi Group Bhd and Equine Capital Bhd, which had slipped from investors’ radar screen, chalked up gains in active trade due to their perceived political links. Scomi rose three sen to 35.5 sen and Equine 6.5 sen to 38 sen.

This article appeared in The Edge Financial Daily, March 27, 2009.