Written by Surin Murugiah
Friday, 18 June 2010 07:00
KUALA LUMPUR: The positive run of some of the Asian markets has started to fizzle out on lingering worries of the actual state of the global economy, with the euro debt crisis and weak US housing data underlining the fact that recovery might take some time.
Data released by the US Labour Department on Thursday, June 17, showed that for the week ending June 12, the number of people filing new claims for jobless benefits jumped again, indicating that termination from work had not slowed down.
Initial claims for jobless benefits rose by 12,000 to 472,000 from the previous week's revised figure of 460,000.
However, European markets on showed some signs of holding up as investors were given hope by a successful Spanish bond auction, which eased fears over the euro zone debt crisis.
Britain's top share index was higher at midday yesterday, boosted by BP as investors welcomed concrete plans to cope with Gulf of Mexico oil spill claims, and by banks after encouraging UK retail sales data, according to Reuters.
British retail sales rose six times faster than expected on the month in May, as consumers bought new televisions to watch the World Cup soccer tournament, the Office for National Statistics said, Reuters reported.
The FBM KLCI has managed to stay afloat above the 1,300-point level but analysts have cautioned investors that the eurozone debt crisis, as well as the lack of fresh leads will cap gains at the local stock market.
There has also been some mild profit-taking at the local market.
At Bursa Malaysia yesterday, the FBM KLCI edged up 0.1% or 1.34 points to 1,304.47. Trading volume dipped slightly to 516.4 million shares, indicating the cautious stance of investors.
RHB Research Institute in a report yesterday said that overall, it remained unconvinced on the recent technical rebound, despite the benchmark finally overcoming the 1,300 major psychological level on Wednesday.
"In our view, with the record of a 'gravestone doji' candle, as well as the mixed momentum signals on the indicators, the FBM KLCI should continue to encounter stiff selling pressure at above or nearer to 1,300.
"In addition, the failure to remove the 40-day SMA at 1,312 yesterday has increased the odds of a technical pullback risk in the near term," it said.
The research house said this meant that unless the index can extend its gains to above the 40-day SMA on Thursday, a technical pullback could happen to drag the index to below the 1,300 psychological level and the 10-day SMA near 1,294 soon.
Further upside resistance is seen at 1,350, should it remove the 40-day SMA unexpectedly, said RHB Research.
Among the stocks that could be in focus on Friday, June 18 are banks, TANJUNG OFFSHORE BHD [], SP SETIA BHD [], SUNWAY HOLDINGS BHD [].
Banking stocks could be in focus after Bank Negara said it was issuing commercial licences to the wholly owned subsidiaries of BNP Paribas SA, Mizuho Corporate Bank, National Bank of Abu Dhabi, PT Bank Mandiri Tbk and Sumitomo Mitsui Banking Corporation.
Bank Negara said that in assessing the applicants, it had taken into consideration the financial strength, track record, expertise, business plan and potential contribution towards the development of the financial sector in Malaysia.
Tanjung Offshore said Ekuiti Nasional Bhd's (Ekuinas) unit E-Cap (Internal) One Sdn Bhd had entered into two agreements with the company to acquire a 20% stake in Tanjung for a total consideration of RM73.4 million.
Tanjung said the exercise was to facilitate the introduction of Ekuinas (through E-Cap) as a strategic investor in Tanjung as well as to raise capital for Tanjung at a premium to the market price.
Trading in Tanjung's securities was suspended in the afternoon session yesterday and will resume at 9am on June 18.
SP Setia net profit for the second quarter ended April 30, 2010 rose 26% to RM51.2 million from RM40.5 million a year earlier, mainly due to sales of residential and commercial PROPERTIES [] in the Klang Valley and Johor Bahru.
The company declared a gross interim dividend of six sen per share in respect of the financial year ending October 31, 2010.
Sunway has entered into a memorandum of understanding with Dasa Tourist Complex (Pte) Ltd of Sri Lanka to explore the formation of a joint venture to develop a 34-storey building in Colombo with a gross development value of about US$78 million (RM254.8 million).
The company said the development, comprising 71 units of commercial and 176 units of residential properties, was located on a plot of prime freehold land in the premium mixed-use zone of Bambalapitiya in District Colombo 4, and had the potential to generate a total sellable area of 400,000 sq ft.