Written by Joseph Chin
Saturday, 27 March 2010 11:01
KUALA LUMPUR: The stock market is expected to have a positive week ahead, starting Monday, March 29 ahead of the release of the details of the New Economic Model and Invest Malaysia 2010 conference.
With trading volume showing a significant increase and the key FBM KLCI staying above the 1,300 level, these factors could also generate more trading interest.
Over the past week, the FBM KLCI has risen 20.44 points while the market capitalisation has increased by RM21 billion to RM1.055 trillion.
CIMB Equities Research, in a recent report, said it is Overweight on Malaysia and it is maintaining its end-2010 FBM KLCI target of 1,450 based on a mid-cycle P/E target of around 15 times.
It was earlier surprised by the net outflow of foreign funds in February of about US$49 million net outflow, as it represented the third straight month of selling and a proportionately bigger percentage of holdings compared with its larger peers such as Singapore or Hong Kong.
“Statistics from Bursa Malaysia reaffirmed foreign funds have lightened positions as their holdings in the market slipped 0.1 percentage points to 20.3% in February,” said CIMB Research.
However, it said it was likely that foreign funds turned net buyers in March as the FBM KLCI staged a rebound during the month and two major conferences held during the month could have attracted foreign interest.
On Wall Street, the Dow and S&P ended flat on Friday, giving back earlier gains after the sinking of a South Korean naval ship, while tech shares' weakness kept the Nasdaq in slightly negative territory, according to Reuters.
However, there is more optimism on Wall Street despite the flat close on Friday. Reuters reported the Dow industrials could hit 11,000 this coming week, as investors bet the US labour market had a significant turnaround in March, showing the economic recovery is in good shape.
Meanwhile, stocks to watch include EON CAPITAL BHD [], ALAM MARITIM RESOURCES BHD [], PROTON HOLDINGS BHD [], Ramunia Bhd and Proton Holdings Bhd. In focus would also be timber-related counters Jaya Tiasa and Ta Ann.
Bank Negara has approved the appointments of seven directors as independent directors of EON Capital Bhd with effect from Friday, March 26.
This could see HONG LEONG BANK BHD [] resuming its plans to make a renewed offer for EON Cap, with more board directors seen to be more keen on the offer now.
The seven were appointed at an EGM on March 15 called by EON Cap shareholders Kualapura (M) Sdn Bhd and Lintang Emas Sdn Bhd, which are keen to dispose of their EON Cap stakes.
Meanwhile, EON Cap’s Islamic Bank plans to launch its first profit-sharing property financing by June, reflecting the industry's move towards more equity funding.
Alam Maritim could see trading interest after its unit secured a RM39.96-million contract to provide an accommodation vessel to an established oil major over a three-year period.
Ramunia posted net profit of RM3.42 million for the first quarter ended Jan 31, 2010, due to rental of shipyard and facilities. This was a contrast from the net loss of RM5.55 million a year ago when it was then affected by high overhead costs for projects and overruns.
Timber companies Ta Ann and Jaya Tiasa could see more trading interest after tropical plywood prices rose by 20% from last year’s low. A Sarawak Timber Association official stated the depleting inventories in Japan could lift demand.
The official was reported to have said Japan, which imports about 1.5 million cubic metres or more than 50% of Sarawak’s plywood production in 2009, had seen its inventories shrink over the past 12 months.
Proton’s share price has rallied as investors expect a much-needed collaboration to be sealed with Volkswagen. Interest in the national car maker is expected to continue as car sales pick up.