Written by Joseph Chin
Wednesday, 19 August 2009 07:25
KUALA LUMPUR: The markets should open higher on Wednesday, Aug 19, as investors' sentiment is bolstered by the firmer close on Wall Street and the resilience of the European and Asian markets the previous day.
The International Monetary Fund also offered some hope that the global economic recovery has begun, but it was also quick to caution that sustaining the recovery will require refocusing the US toward exports and Asia toward imports.
Olivier Blanchard, the IMF's chief economist the turnaround will not be simple as "the crisis has left deep scars, which will affect both supply and demand for many years to come".
On Wall Street, stocks rose on Tuesday, Aug 18, rebounding after sharp losses in the previous session, as better-than-expected results from big retailers encouraged investors to get back into the market.
The Dow Jones industrial average was up 82.60 points, or 0.90%, at 9,217.94. The Standard & Poor's 500 Index was up 9.94 points, or 1.01%, at 989.67. The Nasdaq Composite Index was up 25.08 points, or 1.30%, at 1,955.92.
Oil rose more that 3 percent to top US$69 a barrel as stronger-than-expected earnings results lifted equities and boosted optimism about the economy.
At Bursa, stocks to watch are China's Multi Sports Holdings, which will list on the Main Market, Proton, Hong Leong Bank, WCT and PLANTATION [ PLANTATION 5,859.640 -79.740 (-1.343%) ]s.
Shoe sole maker Multi Sports will be the second China-based company to debut on Bursa. OSK Investment Research was slightly more positive on the company based on its current order book which is three times its current capacity; high cash conversion cycle; less competition (about 100 shoe sole producers versus over 3,000 shoe manufacturers in Jinjiang).
Using the FY2010 PER valuation of 5.4 times FY2010 EPS, it derived a fair value of RM1.03, with an upside potential of 21.5%. The offer price is 85 sen per share.
Meanwhile, PROTON HOLDINGS BHD [ PROTON 2.860 0.030 (1.060%) ] posted a net profit of RM54.55 million in the first quarter ended June 30, 2009 a turnaround from the net loss of RM341 million in the preceding fourth quarter ended March 31, 2009.
The net profit of RM54.55 million was also higher than the RM52 million a year ago, underpinned by better product mix even though there is smaller decline in Proton car sales by 2% compared with the total industry volume, which had contracted by 11% during the same period.
Hong Leong Bank posted net profit of RM905.33 million in the financial year ended June 30, 2009, a 22% increase from the RM741.82 million a year ago.
Total net income was RM 2.1 billion, up 4% on-year from RM2.02 billion a year ago, despite the three interest rate cuts that took rates to historic lows in the country, an unabated price war and volume contraction.
WCT posted a net profit of RM41.9 million on the back of RM1.2 billion in revenue in its second quarter ended June 30, 2009. Net profit slipped 6.5% despite revenue gaining by about 25%.
Plantation stocks, which were hammered down early Aug 18, should gain some respite after the recovery in crude palm oil futures.