Fund Manager: Market may rally after polls

KUALA LUMPUR: OSK-UOB Unit Trust Management Bhd's top fund manager said there is a two out of three chance that Malaysian stocks will rally after the general election.

"Historically speaking, the KL Composite Index (KLCI) rallied in four out of the past six general elections,'' chief investment officer Jason Chong said yesterday at the launch of the company's latest product, Malaysia Dividend Fund.

He noted that Bursa Malaysia was widely perceived as a "safe haven" for investors as the local economy and stock market were "somewhat insulated" from global shocks.

"The economy is largely domestic driven; corporate earnings are expected to grow in the mid-teens this year and the projected dividend yield of 4% for local stocks is one of the highest in the region,'' Chong said.

Share prices around the world have fallen sharply in recent months as worries over a looming recession in the US dampen investor sentiment.

The main indices in Japan, Hong Kong, Shanghai and Australia have plunged by more than 20% from their recent highs, which fit the classic definition of a so-called bear market.

The KLCI has, however, fared better than most of its regional counterparts. The benchmark is down 13% at yesterday's close of 1,314.02 points from a record 1,516 achieved on Jan 11.

A foreign brokerage report issued recently said despite the recent price weakness, Malaysia saw a net inflow of US$404mil from foreign fund managers as of Feb 20.

To compare, most leading regional markets recorded net outflows in terms of investment during the same period.

"We decided to introduce the Malaysia Dividend Fund, which is a conservative fund, largely because of the stock market's volatility,'' chief executive Ho Seng Yee told a media briefing yesterday.

OSK-UOB manages over RM3.6bil with 34 unit trust funds under its stable.

"The Malaysia Dividend Fund aims to provide investors with recurring income and capital growth in the medium to long term period through investment in Malaysian securities that offer attractive yields and sustainable dividend payments,'' he said.

Ho said the targeted RM300mil fund would be mostly invested in mature companies that generate a lot of cash from their operations and had the capability to pay high dividend.

Among these are big companies in the consumer, gaming and plantation sectors.

The new fund is the second unit trust fund launched by OSK-UOB this year, and is also its first local equity dividend fund.

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This post has been edited by David83: Mar 5 2008, 04:41 PM

Weak sentiment hampers cash calls

PETALING JAYA: Making a cash call may be an uphill task for many listed companies, given that the current jittery market sentiment has driven share prices to levels that are substantially lower than their recent peaks.

Thus, it would be rather difficult to convince shareholders to subscribe to rights issues when share prices are dropping.

"The weak market sentiment will not be favourable for fund-raising exercises. The risk of under-subscription is higher when share prices are going down," said MIMB Investment Bank head of equity research Pong Teng Siew.

StarBiz learned that Kejuruteraan Samudra Timur Bhd's (KSTB) proposed rights issue had to be put on hold as its share price has fallen below its par value of 50 sen. The stock closed at 42 sen yesterday.

Apparently, the KSTB board did not foresee the drastic fall in its share price, which was hovering between 50 sen and 60 sen when the company proposed a rights issue of 48.8 million new shares in November last year.

An option for the company is to bide its time since it has until July to implement the rights issue, in the hope that market sentiment would improve by then.

Analysts said it would not be wise to have rights shares pegged at a price higher than the market value.

"It makes more sense to buy on the open market if the price of a rights share is higher than the market price," said Phillip Capital Management Sdn Bhd chief investment officer Ang Kok Heng.

He said institutional funds were likely to take up a rights offer at a higher subscription price because it could be difficult for them to buy a sizeable block of shares from the market to maintain their shareholding.

Despite the share price plunge, companies like Wah Seong Corp Bhd and LCL Corp Bhd are going ahead with their cash calls.

"The long-term prospects of Wah Seong are positive. Hence, we believe investors who base their decision-making on long-term fundamentals should have no issue subscribing to the rights issue," group chief executive officer Chan Cheu Leong told StarBiz yesterday.

Wah Seong, he said, would not revise the exercise price of RM2.23 versus yesterday's closing of RM2.19.

"We believe that the subscription price of RM2.23 is still attractive as each rights share comes with 1.5 free warrants with a five-year tenure," he added.

Chan said the group was not concerned over the poor response because the major shareholders, namely the Tan and Chan families, had given their respective undertaking to subscribe to the rights issue. Also, Commerce International Investment Bank Bhd would fully underwrite the rights issue.

LCL Corp Bhd managing director Low Chin Meng said the group was proceeding with its rights issue to raise fresh funds for its project in Dubai.

"We believe that our investors will remain confident of our future prospects, given our track record and strong order book, which has exceeded RM1bil," he said when asked whether the group would defer its rights issue.

The weak market sentiment is not only a concern for companies that need fresh capital but also investment banks that underwrite the issues.

Investment banks may have to hold on to the unsubscribed rights shares if the market price is too low for them to place the shares out.

But it is said that these deal advisers would have earlier hedged their risks by getting the shares placed out to other investors.



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DJIA starts the day with:

12,235.29 +21.49 +0.18%

DJIA closed the day with:

12,254.99 +41.19 +0.34%

Foreign funds selling drags down KLCI
PETALING JAYA: Sentiment on the ground is still pretty positive despite the KL Composite Index (KLCI) falling 33.79 points or 2.57% to close at 1280.23 yesterday. The lowest closing in 5½ months was mainly due to foreign funds selling blue chips and plantation stocks.

Losers led gainers by nearly four-to-one while 214 counters were unchanged. A total of 810.17 million shares valued at RM2.12bil changed hands.

Total market capitalization fell to RM975.11bil from RM998.55bil on Tuesday.

The top five losers were Kuala Lumpur Kepong Bhd, which fell RM1.60 to RM16.60, Batu Kawan Bhd, down 70 sen to RM10.40 and UMW Holdings Bhd, which shed 65 sen to RM6.10. Bursa Malaysia Bhd and MISC Bhd each slipped 55 sen to RM9.85 and RM8.15 respectively.

In the region, Singapore's Straits Times Index was down 0.31%% to 2910.77, Hong Kong's Hang Seng Index dipped 0.02% to 23,114.34, Tokyo's Nikkei 225 lost 0.16% to 12,972.06 and Shanghai Stock Exchange composite index dropped 0.99% to 4,292.65 due to continuing concerns over the US economy.

According to CIMB Research head Terence Wong, the Malaysian market is "playing a bit of catch-up" due to the other markets' better performance earlier in the year.

"The fundamentals are there, corporate earnings for the fourth quarter were pretty strong and came in above expectations," he said.

CIMB Research's report on the fourth-quarter results stated that last month's results reporting season "was a solid one" and similar to the November reporting period.

"The February reporting season can be considered stronger than the one in November, because of the 80 companies that we track, only 15% fell short of expectations versus 18% in November. The percentage of companies that outdid expectations held steady at 26%," it said, adding that companies that performed in line with expectations rose to 59% from 56%.

"The Malaysian market is actually doing all right compared with the world's major markets which have seen their key indices fall by 15% to 20%," Wong said, adding that it was natural for foreign funds to sell now to lock in gains.

OSK Investment Bank Bhd research head Kenny Yee noted that selling by foreign funds had been prevalent since last month largely due to the run-up to the general election.

"There's also the fact that the KLCI was the best performer in the region in January and year-to-date it's not done that badly either compared with the double-digit declines of other indices," he told StarBiz.

There were some downgrades of index-linked counters but looking at recent results with no major adjustments, it should be pretty positive for the rest of the year, he said.

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KLCI snaps losing streak, up 1% at midday

PETALING JAYA: The market snapped its recent losing streak, reaching a high of 1,300 in early trade Thursday, with investors seen picking up oversold stocks as sentiment was reinforced by firm regional markets.

However, nagging worries about the record high crude oil prices, which hit nearly US$105 per barrel, and the heavy selling on Bursa recently, saw some profit taking emerging in the later part of the morning.

At 12.30pm, the KLCI was up 13.86 points or 1.08% to 1,294.09, the FBM Emas added 82.88 points to 8,788.07 and the FBM Second Board was 32.09 points higher at 6,048.09.

Turnover was still thin with only 269 million shares done valued at RM566mil. There were 347 gainers and 219 lowers, while 260 counters were unchanged.

Asian markets rose, with Japan's Nikkei 225 up 2.71% or 352.18 points to 13,324.24, while Hong Kong's Hang Seng Index added 2.17% to 23,615.18 and Singapore's Straits Times Index rose 1.35% to 2,950.04.

At Bursa, Maybank, Tenaga and Telekom rose 10 sen each to RM8.80, RM8.70 and RM11.10 respectively.

Tanjong was the top gainer, up 70 sen to RM15.90. BAT, MISC foreign and Bursa added 25 sen each to RM43, RM8.10 and RM10.10 respectively.

Sarawak Oil Palms added 25 sen to RM5.90, IOI Corp 20 sen to RM7.55 while Sime Daby edged up 10 sen to RM11.

Gamuda rose eight sen to RM3.60 in active trade, with 9.54 million shares done. Actively traded Genting added 20 sen to RM6.65, Public Bank 15 sen to RM10.10, Ramunia 13 sen to RM1.55 while MRCB advanced five sen to RM1.89

However, KLK came under selling pressure again after yesterday's sell-off. While it managed to claw back some gains in early trade, rising to a high of RM16.90, the gains were not sustainable. It fell 30 sen to RM16.30.

DiGi lost 20 sen to RM22.80 and Parkson 15 sen to RM6.90.

Welli Multi fell 19 sen to 23 sen. The Companies Commission of Malaysia had given it another extension until March 31 to present its audited financial statements for the financial period ended March 31, 2007.

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KLCI stages technical rebound, oil at record high

PETALING JAYA: The stock market staged a technical rebound in early trade on some bargain-hunting of oversold counters like Tanjong, IOI Corp and KL Kepong, in line with key Asian bourses and the firmer close on Wall Street.

However, the gains could be limited due to the record high oil prices at US$104.74 per barrel, aggravated by a drop in US oil supplies.

At 10am, the KLCI was up 20.31 points to 1,300.54. Turnover was 89 million shares valued at RM181mil. There were gainers, losers and counters traded unchanged.

On Wall Street, the Dow Jones Industrial Average closed 41.19 points or 0.34% higher at 12,254.99 as evidence that the services sector may not be as weak as feared, allaying investors' fears about a recession.

Asian markets were higher in early trade, led by the Nikkei 225, which rose 1.48% or 192 points to 13,164.08, while Singapore's Straits Times Index added 0.48% to 2,924.75 and Hong Kong's Hang Seng Index opened 0.9% higher at 23,322.60.

However, China stocks fell, with Shanghai's "A" share index down 0.59% to 4,477.26.

At Bursa Malaysia, KL Kepong, which fell as much as RM1.60 Wednesday, managed to gain 30 sen to RM16.90. Sarawak Oil Palm and IOI Corp added 30 sen each to RM5.95 and RM7.65 respectively while Sime Darby gained 20 sen to RM11.10.

Tanjong added 30 sen to RM15.50, Bursa and Public Bank advanced 25 sen each to RM10.10 and RM10.20 respectively while Genting rose 20 sen to RM6.65.

URL: http://biz.thestar.com.my/news/story.asp?f...47&sec=business

DJIA closed shop with losing 200 points:

12,040.39 -214.60 -1.75%

Call warrants good choice in bear market

KUALA LUMPUR: In bear markets, equities and equity derivatives such as call warrants are a good choice, especially blue chips and heavyweights with an upside story, according to HwangDBS Investment Bank chief executive officer Alex Hwang.

In a statement yesterday, Hwang said: "Additionally, call warrants can offer a smart addition to an investor's portfolio although as with all investments, caution and attentiveness to market movements is required on the part of the investor."

HwangDBS recently introduced its first retail structured product for 2008 in the form of two China-linked call warrants.

They will leverage on China Railway Group Ltd and China Mobile Ltd, the country's two leading blue-chip stocks.

China Railway is the largest railway, road and tunnel construction contractor in Asia and the third largest globally. Its shares have risen 62% since their debut in early December last year.

China Mobile is the world's largest mobile phone operator ranked by number of subscribers.

The warrants - consisting of 100 million units each - are exercisable American-style, whereby investors have the rights any time before or on the expiry date of the structured warrants.

The expiry dates for China Railway and China Mobile are nine and eight months respectively from Feb 29, the issue date of the structured warrants.

The entitlement ratio for the structured warrants is 10 China Railway call warrants for one China Railway share and 100 China Mobile call warrants for one China Mobile share.

The issue price of the call warrants is set at 11 sen for China Mobile and 10 sen for China Railway and the exercise price is set at HK$111 for China Mobile and HK$9.30 for China Railway.

Both the call warrants will be listed on Bursa Malaysia today.

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Plantations weigh down market
PETALING JAYA: Blue chips ended the morning session sharply lower, with plantation stocks and heavyweights dragging the KLCI down more than 10 points as the weak market sentiment mirrored the regional bourses.

At 12.30pm, the KLCI was down 10.47 points or 0.78% to 1,289.55, the FBM Emas lost 80 points to 8,747.6 and the FBM Second Board fell 64.31 points to 6,030.37.

Turnover was 302.91 million shares valued at RM435.41mil. Losers beat gainers nearly five to one. There were 496 decliners compared with 100 advancers while 217 counters were unchanged.

All major Asia-Pacific markets were in the red, with Japan's Nikkei 225 the worst hit, tumbling 3.02% or 399.46 points to 12,815.96, Australia's All Ordinaries down 2.98% to 5,367.3, Hong Kong's Hang Seng Index down 2.85% to 22,678.53, Singapore's Straits Times Index 1.95% lower at 2,860.89 while Shanghai's A Share Index fell 1.85% at 4,490.97.

Investors' worries about more credit-related losses in the United States continued to weigh down investors' sentiment. Another factor was another record high light crude oil price, which was quoted at US$105.42 per barrel.

Meanwhile, a foreign research said in its equity strategy on Malaysian corporations that cost pressures could surprise on the upside. It added that while consensus still projected 14% earnings per share (EPS) growth for the market, it was cutting its estimates for the second time since end-October 2007.

"Removing exceptional items, we forecast market EPS will grow by 8% in 2008," said Citigroup global markets equity research.

At Bursa Malaysia, heavyweights Telekom fell 20 sen to RM11 while Tenaga and Maybank lost five sen each to RM8.70 and RM8.85 respectively.

Among plantation stocks, KL Kepong lost 30 sen to RM15.90, Sarawak Oil Palm 25 sen lower to RM5.65 while SOP-OR tumbled 50 sen to RM3 and the warrants 26 sen lower to RM4.30. Batu Kawan lost 20 sen to RM10.30 and Chin teck 20 sen to RM7.40.

QSR was also among the major losers, down 31 sen to RM2.35 while Kulim-WB lost 20 sen to RM5.80. Tanjong, BCHB and Genting fell 20 sen each to RM15.70, RM10 and RM6.50 respectively.

The major gainers were Aeon, up 25 sen to RM9.50 while VADS added 20 sen to RM5.75. Stemlife and Pelikan gained 18 sen to RM2.30 and RM3.46 while RHB Cap added 12 sen to RM3.46.

URL: http://biz.thestar.com.my/news/story.asp?f...27&sec=business

Asia-Pacific markets skid in early trade

PETALING JAYA: Key Asia-Pacific markets skidded in early trade, with Australia and Japan among the worst hit, dragged down by the overnight fall on Wall Street as mortgage woes continued to haunt investors.

Oil was at a fresh record high of US$105.58.

At 10am, the KLCI was down 8.77 points or 0.67% to 1,290.92, but off the early low of 1,283. Turnover was 98.3 million shares valued at RM127mil. Losers hammered gainers 323 to 48.

Across Asia Pacific, Australia's All Ordinaries tumbled 3.04% or 168.4 points to 5,363.5, the S&P/ASX 200 fell 3.21% to 5,260.9, Japan's Nikkei 225 slid 2.88% to 12,834.97, Shanghai A Share Index was 1.31% lower at 4,515.71 and Singapore's Straits Times Index was 1.96% lower at 2,860.78. Hong Kong's Hang Seng Index fell 2.68% to 22,717.21.

In the United States, stocks fell on Thursday after a series of fresh jolts to credit markets and lacklustre retail sales compounded worries that the world's largest economy was nearing a recession. The Dow Jones Industrial Average fell 1.75% to 12,040.39.

At Bursa Malaysia, plantation stocks were among the major losers. Sarawak Oil Palm-OR fell 50 sen to RM2.23 and the shares 20 sen lower to RM5.70. Sime Darby lost 20 sen to RM10.90, Asiatic 15 sen to RM8.20 and IOI Corp 10 sen to RM7.45.

Other losers included QSR, down 43 sen to RM3, Keck Seng 38 sen to RM4.02 and BCHB 20 sen to RM10.

URL: http://biz.thestar.com.my/news/story.asp?f...44&sec=business

KLCI falls 7.24% in early trade

PETALING JAYA: Stocks came under heavy selling pressure in early trade on Monday, with the KLCI falling to multi-months low of 1,202 as investors reacted to the news of the general election and also the sharp fall on Wall Street last Friday.

Key Asian markets also fell in early trade, registering losses of between 1.24% and 2.24% as investors feared the recession in the United States following the latest batch of bad news, including job losses.

At 10am, the KLCI was down 93.82 points or 7.24% to 1,202.51. Turnover was 269.86 million shares valued at RM668mil. Losers hammered gainers 659 to 14.

Last Friday, the Dow Jones Industrial Average fell 1.22% to 11,839, below the key support level of 12,000.

Shanghai's "A" share index fell 2.24% or 101 points to 4,410.96, making the second worst affected market after Malaysia. Singapore's Straits Times Index skidded 1.73% to 2,816.80, South Korea's Kospi lost 1.63% to 1,635.41 and Japan's Nikkei 225 fell 1.43% to 12,599.78. Hong Kong's Hang Seng Index opened 0.5% lower at 22,387.25.

Stocks linked to the multibillion-ringgit Pahang-Selangor water transfer project fell sharply. KPS hit limit down, falling RM1.02 to RM2.40, Puncak Niaga RM1.18 to RM3.34 and JAKS 30 sen to 70 sen.

MRCB, which is undertaking the monorail project in Penang, lost 57 sen to RM1.36. It was the most active with 22 million shares done.

DiGi was the top loser, down RM1.40 to RM21.60, KL Kepong RM1.20 to RM14.90, Tenaga RM1.15 to RM7.50 and Sime Darby RM1.10 to RM9.90. UEM World lost 60 sen to RM2.84.

On Bursa Malaysia's outlook, CIMB Research said in view of the poor performance of the Barisan Nasional in the general elections, it had downgraded Malaysia from overweight to neutral.

It advised investors to go defensive and seek out counters which had low reliance on domestic factors such as plantations and oil and gas.

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KLCI may face more downward pressure

MAIN BOARD

THE KL Composite Index (KLCI) finished the week with sharp losses on renewed selling in all main index-linked stocks as well as the bearish sentiment influenced by the declining US and Asian markets.

Concerns over a US recession and the bearish impact it would have on markets worldwide are becoming real. Recent comments by the world's richest man, Warren Buffett, that the United States is already in a recession and his uneasy feeling as to how long it would last have generated some uneasiness among large hedge funds.

The KLCI fell from a week's high of 1,344.46 to a low of 1,277.69 points and finished the week sharply lower at 1,296.33, down a hefty 61.07 points or 4.50% from the week before.

All the top 10 index-linked stocks settled the week with large losses.

Volume for the week eased slightly to 1.169 billion from 1.222 billion shares the week before. The daily average volume fell to 233.9 million from 224.5 million shares.

In last week's column, I mentioned that a vital chart support stands at 1,350-1,330 points and, in the event of a successful break below these support levels, the index would trend lower and test its six-month lows at around 1,300-1,280. This has come to pass and we have the index closing the week at the mid-range of this minor support base.

I expect the index to make an early downward break from here this week and head south to initially test the 1,250-1,230 levels. My technical outlook would turn very bearish if the index fails to hold at these levels. My minor chart base is now adjusted lower to the 1,200-1,180 levels.

Technically, I am bearish in my near-term outlook and would look to any intermittent bullish rally to sell just as over the past couple of months most people took the opportunity to buy on any dips.

The overhead resistance for the immediate term is now pegged at 1,300-1,315.

The daily technical indicators closed the week mostly negative and called for more downward pressure for the immediate term.

The daily stochastic triggered the sell signal on March 6 and suggested the index was in a bearish extended-move phase. The oscillators per cent K and D closed lower at 16.83% and 9.91% respectively.

The daily Money Flow Index (MFI) ended slightly higher at 19.12 points and showed light accumulation occurred last week.

The main trend-tracker, the 3- and 7-week exponentially smoothed moving-average price lines (ESA-lines), gave the bearish divergence signal on Jan 25 and continued to show the main trend was bearish.

The 3- and 7-day ESA-lines, remained in bearish divergence and indicated the bearish cycle would continue this week.

The 5-day Relative Strength Index (RSI) settled higher at 24.85 points. Analysis of the RSI shows the index was now out of its oversold position.

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Stockbrokers downgrade KLCI fair value

By KATHY FONG

PETALING JAYA: The strong wave of selling that swept across Bursa Malaysia yesterday wiped out RM86bil, or 8.7%, from the bourse's total market capitalisation of RM984bil as at last Friday.

The KL Composite Index (KLCI) tumbled 123 points, or 9.5%, to a 14-month low of 1,173.2 points in its biggest single-day loss so far.

The intensive selling activated the circuit breaker at around 3pm. Trading was halted for an hour when the benchmark index plunged 130 points, or 10%, to 1,166. This was the first time the market-wide circuit breaker was activated on Bursa Malaysia.

"The magnitude of the fall was bigger than expected," said Kenanga Asset Management Sdn Bhd chief investment officer Chen Fan Fai.

Chen described the market as currently in "uncharted territory".

He said the direction of public policy and economic measures had become a big unknown after the ruling Barisan Nasional lost its two-third majority in parliament and the opposition parties took control of Kedah, Penang, Perak and Selangor.

The KLCI is down nearly 343 points, or 22.6%, from its record high of 1,516 on Jan 11. Such a drastic fall is a sure sign that the local bourse has turned bearish.

The ringgit also fell 1.3% to 3.2074 versus the dollar. The drop was seen as evidence of the outflow of foreign investment.

The regional markets also suffered from heavy selling. Tokyo's Nikkei 225 Index shed 250.7 points, or nearly 2%, to 12,532 points, Singapore's Straits Times Index dropped 29.6 points, or 1%, to 2,836.6 while the Jakarta Composite Index slid 128.6 points, or 4.8%, to 2,527.9.

Given the jittery sentiment, more stockbrokers have now slashed their fair value for the KLCI.

AmResearch has cut its fair value to 1,300 from 1,590, while Aseambankers Malaysia Equity Research reduced its year-end target for the KLCI to 1,350 points.

HwangDBS Vickers Research also trimmed the KLCI's year-end target to 1,360 yesterday.

Despite the expected sell-down, Citi Equity Investment urged investors to pick up "fundamentally good" plantation and telecommunication stocks. It warned clients to avoid the cyclical property and construction stocks.

Credit Suisse said Malaysia would not be attractive until political clarity emerged over the next six or 12 months.

One main concern is whether the roll out of infrastructure projects under the Ninth Malaysia Plan would be affected since these involved both federal and state governments.

Also, there are worries over the possible delay in contracts that have already been awarded should the newly formed state governments review them.

Analysts said scrapping certain public projects would certainly hurt companies' earnings.

However, they said it would be good for the economy in the long term if those projects were not justifiable in terms of social benefits, and the money could be channelled for better use.

"The new political equilibrium will, hopefully, bring with it the checks and balances, which should in the future, curb the excesses of the past," Credit Suisse's report said.

Stocks perceived to be politically linked and heavyweights were among the worst hit.

Kumpulan Perangsang Selangor Bhd, Equine Capital Bhd and Malaysian Resources Corp Bhd hit limit-down amid fears that these companies might not win certain public projects as expected.

Tenaga Nasional Bhd's share price dived RM1.30 to RM7.35 on concerns that the utility group's efforts to lobby for a tariff hike would not bear fruit.

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Market firmer at midday, CPO surges

PETALING JAYA: Stocks were firmer at midday, underpinned by some bargain hunting for index-linked stocks and plantation counters after the massive sell-off Monday.

The surge in crude palm oil futures lent support to the plantation stocks. Third-month CPO futures contract rose RM194 to RM3,859 per tonne.

At 12.30pm, the KLCI had risen 24.68 points or 2.1% to 1,197.90, the FBM Emas added 176.44 points to 8,138.26 and the FBM Second Board 54.56 points higher 5,709.23.

Turnover was 641.59 million shares valued at RM1.48bil. There were 536 gainers, 199 losers and 172 counters traded unchanged.

Key Asian markets were mostly lower, weighed down by the record high oil price of US$108 and fears of recession in the United States.

Hong Kong's Hang Seng Index fell 1.33% to 22,403.35, Shanghai's A Share Index 0.66% lower at 4,321.44, Singapore's Straits Times Index lost 0.26% to 2,829.24 while Japan's Nikkei 225 eased 0.14% to 12,514.31.

On Bursa Malaysia, despite the rebound in blue chips in the morning session, investors were still cautious after the sharp sell-off Monday.

On the upside, analysts said Barisan Nasional's failure to secure a two-third majority had caused a negative reaction in the market. However, they said the federal government was still under the BN and there was still political stability.

Among the heavyweights, BCHB and Telekom added 35 sen each to RM9.15 and RM10.30, Maybank 25 sen higher to RM8.70 but Tenaga fell five sen to RM7.30.

Plantations were higher, led by Asiatic, which gained 50 sen to RM7.75, Sime Darby 35 sen higher to RM9.75 while United Plantations, Chin Teck and KL Kepong gained 30 sen each to RM13.60, RM7.30 and RM15.20 respectively. IOI Corp added 15 sen to RM6.80.

MRCB advanced nine sen to RM1.36. It was the most active with 42.3 million shares done.

Equine Capital added 18.5 sen to 89.5 sen, partly recovering from the Monday sell-off.

Steel pipe maker JAKS gained 5.5 sen to 67.5 sen and KPS added four sen to RM1.72, also off Monday's lows when investors sold the shares on concerns about their participation in the Pahang-Selangor water transfer project.

Investors' expectations that the Iskandar Development Region would not be affected by the recent political changes saw UEM World surging 23 sen to RM2.96.

URL: http://biz.thestar.com.my/news/story.asp?f...20&sec=business

Bargain hunting pushes up KLCI

By IZWAN IDRIS

PETALING JAYA: The KL Composite Index (KLCI) bounced back yesterday after the steep fall on Monday sent bargain hunters swooping in on stocks that have taken a beating.

Local sentiment was also aided by rising share prices across the region despite continued weakness in the US market overnight.

The KLCI was up 33.03 points, or 2.8%, at 1,206.56 yesterday amid lingering concerns over rising political risk following Barisan Nasional's worst-ever performance in Saturday's general election.

Most analysts were of the view that the 9.5% decline on Monday was excessive and attributed the panic selling to political uncertainty rather than economic conditions.

"We reiterate our view that a market correction will turn into an opportunity to buy on weakness in our preferred sectors of plantation, banks, oil and gas, and telecommunications,'' RHB Research Institute said in its market update report yesterday.

However, it cautioned investors that the market would see "false recoveries and knee-jerk reactions" in the short term as the political situation unfolds.

The Malaysian bourse has under-performed its regional counterparts over the past one month and is down by more than 15% since Parliament was dissolved on Feb 13.

The benchmark has fallen more than 20% from its Jan 11 peak of 1,516 points, fitting the classic definition of a so-called bear market.

"Although (Malaysian) stock valuations are starting to look attractive, we believe it is too early to buy into the market due to the political uncertainties,'' research firm CLSA Asia Pacific Markets said yesterday.

It recommends that investors switch to high-yield domestic oriented companies and avoid politically-linked counters, especially those in the construction sector.

Meanwhile, OSK Investment Bank yesterday joined the growing rank of brokerages that had slashed their year-end target for the KLCI in view of the country's recent political changes.

The investment bank, in its market strategy report, lowered its KLCI's year-end target to 1,340 points from 1,650 previously and recommended that investors focus on large "defensive" stocks.

"We have gone more defensive, with capital preservation as the main focus and are looking at companies with the strongest propensity to stay firm amid the vagaries of the stock markets, be it locally or regionally,'' it said.

OSK's picks for capital preservation include DiGi.Com Bhd, KNM Group Bhd and Petronas Gas Bhd while IOI Corp Bhd, Malaysia Airlines and Bursa Malaysia Bhd are for higher beta exposure to the market.

Meanwhile, yesterday's market recovery was mainly attributed to a "technical rebound" after the sharpest fall in a decade pushed the KLCI deep in "oversold" territory.

The benchmark's Relative Strength Index (RSI) reading stood at 18.3 on Monday, below the 20-point level considered by technical analysts as a sign that the market is oversold.

Yesterday's rebound lifted the RSI to 26.7 points, Bloomberg data shows. The market is considered overbought if the reading goes above 80 points.

URL: http://biz.thestar.com.my/news/story.asp?f...35&sec=business

Asian markets rally, KLCI at 1,243

PETALING JAYA: Asian markets rallied in early trade Wednesday, with the KLCI soaring nearly 38 points, boosted by the strong overnight close on Wall Street after the US Federal reserve said it would inject US$200bil into the strained credit markets.

At 10am, the KLCI was up 37.35 points or 3.10% to. Turnover was 240.7 million shares valued at RM477mil. Advancers beat decliners 470 to 56 while 97 counters were unchanged.

Following Monday's rout, when the KLCI fell 123 points on investors' jitters after the Barisan Nasional failed to secure a two-thirds majority in the recent general election, the KLCI had recouped about 70.5 points as at 10am.

Asian markets were also higher in early trade. Japan's Nikkei 225 jumped 2.63% to 12,991.56; Singapore's Straits Times Index rallied 3.22% to 2,952.92 while Shanghai's A Share Index added 1.14% to 4,420.67. Hong Kong's Hang Seng Index opened 3.23% higher at 23,737.65.

The Dow Jones Industrial Average rallied 416.66 points or 3.55% to close at 12,561.81. In percentage terms, the DJIA recorded its biggest gains since March 2003.

According to Reuters, the Fed said it was expanding a lending programme and it would accept a broader base of securities as collateral, including mortgage bonds whose value had fallen after the housing bubble burst.

At Bursa Malaysia, the major gainers were DiGi, surging RM1.50 to RM23.10, KLK added 80 sen to RM16 while Batu Kawan gained 45 sen to RM10.20.

Sime Darby, IOI Corp and BCHB advanced 40 sen each to RM10.20, RM7.30 and RM9.75 respectively.

MRCB continued to dominate trading, rising 24 sen to RM1.47. It was the most active with 11.7 million shares done. Gamuda added 24 sen to RM3.26 while Equine Capital added 5.5 sen to 99 sen and JAKS three sen to 72.5 sen.

URL: http://biz.thestar.com.my/news/story.asp?f...39&sec=business

DJIA closed the day with:

12,110.24 -46.57 -0.38%

US market rally spills into Asia

By IZWAN IDRIS

PETALING JAYA: Shares on the KL market rose for a second day yesterday, extending a rebound after the rout on Monday, as the huge rally in the US overnight lifted stock market indices across Asia.

While the local market won some reprieve yesterday, most players expect the KL Composite Index (KLCI) to remain under pressure in the coming days amid a steady stream of revisions by brokers.

Standard & Poor's and Affin Investment Bank yesterday joined the growing ranks of research houses lowering their ratings on Malaysian stocks.

Like most brokerages that issued their strategy reports in recent days, the two firms cited higher earnings risk outlook for companies, especially those involved in construction and property development.

The Barisan Nasional unexpectedly lost four states and failed to recapture Kelantan in the 12th general election held on Saturday.

"A number of research houses are telling their clients to go defensive due to near-term political uncertainties and possible changes in development priorities,'' a fund manager at a local asset management firm said.

Shares in mobile telecommunications company DiGi.Com Bhd surged RM1.20, or 5.6%, to RM22.80 to become the day's top gainer.

Plantation and banking stocks also posted healthy gains, on hopes that companies like IOI Corp Bhd (up 45 sen) and Public Bank Bhd (up 30 sen) are the better bets to weather any uncertainties.

Strong gains by big-cap stocks yesterday lifted the KLCI 26.05 points, or 2.16% higher, to 1,232.59, off the day's low of 1,231.08 points.

The benchmark jumped on the opening bell to an intra-day high of 1,251 points, spurred by Wall Street's sharpest gain in almost five years after the Federal Reserve announced a plan to pump as much as US$200bil to revive lending among big banks in the United States. (See B13)

"The US$200bil package is expected to have a positive impact in the short term, but possesses long-term implications for the US dollar,'' OSK Investment Bank said yesterday.

Most Asian currencies advanced against the greenback yesterday, led by the ringgit and the Indonesian rupiah.

The US dollar's weakness has pushed up crude oil prices by more than 13% so far this year, as the most traded crude oil futures contract in New York yesterday hovered at about US$109 a barrel.

URL: http://biz.thestar.com.my/news/story.asp?f...68&sec=business

Markets weaker, Tenaga slides 55 sen

By Joseph Chin

KUALA LUMPUR: Asian markets including Bursa Malaysia retreated in early trade Thursday, as record US crude oil prices fuelled inflationary fears while the rally on Wall Street faded.

Heavyweight Tenaga fell 55 sen to RM6.65, it's lowest since 2002, as analysts cut its profit outlook on higher coal prices.

At 10am, the KLCI had fallen 28.07 points or 2.28% to 1,204.52. Turnover was 114.9 million shares valued at RM287 million.

There were 372 losers, 43 gainers and 99 counters unchanged.

In Asia, Singapore's Straits Times Index fell 42.45 points or 1.45% to 2,875.69, Japan's Nikkei 225 lost 2.03% to 12,600 while Shanghai's A Share Index lost 2.44% to 4,166.11. Hong Kong's Hang Seng Index opened 2.25% lower at 22,896.47.

The Dow Jones Industrial Average fell 0.38% or 46.57 points to 12,110.24 as investors turned cautious about the Federal Reserve's US$200 billion lifeline to ease credit market strains. Oil hit a record high of US$110.12.

At Bursa, heavyweight Maybank and Genting fell 35 sen each to RM8.35 and RM6.35 while Sime Darby and BCHB lost 30 sen each to RM9.70 and RM9.35.

Among the major losers were Tanjong down 50 sen to RM15.20; FB30ETF lost 43 sen to RM7.80, Asiatic 40 sen to RM7.90 and BHIC 30 sen to RM5.

UEM World was the most active with 9.6 million shares, falling 29 sen to RM2.77. Actively-traded MRCB lost nine sen to RM1.32 and Gamuda gave up two sen to RM3.14.

URL: http://biz.thestar.com.my/news/story.asp?f...05&sec=business