Story By : Tee Lin Say
via www.biznewsdb.com
WITH the growing volume and increasing interest among foreign funds, coupled with the Kuala Lumpur Composite Index (CI) being a laggard in the last two weeks, analysts are expecting the CI to stage a more convincing run up this week.
Volume has been steadily increasing on the back of vibrant rotational plays particularly among the oil and gas and plantation companies. News flow, both externally and domestically have been fairly positive. With most funds being cash up and looking to take new positions, this ought to support prospects of financial markets seeing further upside.
Over the week, Bank Negara Malaysia relaxed certain foreign exchange administration rules to cut cost of doing business in Malaysia. Taking effect from October 1, the changes include abolition of the five registration requirements and granting greater flexibility for Islamic funds managed onshore.
Non-Malaysians will also have more flexibility in hedging their ringgit exposure under the easier rules.
TA Securities technical analyst Stephen Soo says that these measures will see more investors coming to Malaysia.
While Malaysia has been steadily liberalising its market, this latest move should allow relatively freer fund flows, hence pointing to the market going up.
Local funds should be coming into the market in a bigger way too. The Dow Jones is now trading near its record high. If it can confirm a breakout in the coming week, I think we will see bigger buying orders across the globe,¡¨ he says.
He adds that domestically, buying momentum has been quite resilient.
I am more comfortable with the market now compared to two weeks ago. If you notice, the volume shrunk with the decline in the market, but correspondingly increased when the market went up. This indicates less selling pressure and is a positive sign in a bull market,¨ he says.
In the US, a report released Thursday showed new home sales fell 8.3% in August to a 795,000-unit annual rate. The median home price fell to US$225,700 from US$246,200, a 7.5% drop from a year ago.
US economic growth was slower than previously thought in the second quarter. The government revised US GDP growth from 4% to 3.8%, a move that was widely expected.
Despite statistics pointing towards a slowdown in the world's biggest economy, the Dow continues to scale upwards as investors expect the Fed to change into a more accommodative monetary policy.
The anticipation of more rate cuts can be clearly seen from the building up of buying interest.
Soo is expecting a belated market run up for the CI this week. He has pegged his resistant levels as the 1,350, 1,370 and 1,392 point respectively. The market will find support at the 1,320 and 1,302 levels.
On the corporate front, Putrajaya Perdana Bhd is bidding for some RM2bil worth of contracts to add to its current RM1.3bil outstanding contracts in hand.
Century Logistics Holdings Bhd plans to venture into the oil support services business by investing up to RM40mil to buy two vessels next year. The ships could be tug boats to transport oil rigs or they could also be used for oil rig crew accommodation.
For the six months to July 31, TA Enterprise Bhd posted an 87% increase in its net profit to RM114.4mil while revenue was also higher at RM272.3mil.
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