Written by Joseph Chin
Saturday, 22 January 2011 10:11
KUALA LUMPUR: The local stock market may see cautious trade on Monday, Jan 24 after the profit taking by foreign funds on Friday, which pushed the FBM KLCI to the lowest since Jan 3 while RM18.07 billion wiped out from the market capitalisation in one day.
The FBM KLCI closed at a three-week low on Friday, the worst performance since this year as some funds took money off the table, in line with key regional markets on concerns about more monetary tightening policies by China's government.
The KLCI was down 19.08 points or 1.22% to 1,547.43, the lowest since Jan 3 when trading started for the year as local institutions stayed on the sidelines. The profit taking, especially of banks and PLANTATION []s, saw the market capitalisation reduced to RM1.306 trillion from RM1.324 trillion on Thursday.
On Wall Street, the Dow Jones industrial average rose 49.04 points, or 0.41%, to end at 11,871.84. The Standard & Poor's 500 Index added 3.09 points, or 0.24%, to 1,283.35. The Nasdaq Composite Index shed 14.75 points, or 0.55%, to close at 2,689.54.
General Electric Co's earnings put a positive tone on the economic recovery, snapping a two-day losing skid for the DJIA. The Nasdaq was pulled lower by Google, ending a week marked by investors pulling back from outperforming TECHNOLOGY [] shares.
At Bursa, stocks to watch include MALAYSIA SMELTING CORPORATION [] Bhd, TIME ENGINEERING BHD [] (TEB), TIME DOTCOM BHD [], banks and plantations. Also in focus would be HUA YANG BHD [], SEG INTERNATIONAL BHD [] and CapitaMalls Malayaisa Trusts (CMMT)
MSC’s public offer of its shares for secondary listing on Singapore Exchange Securities Trading Ltd (SGX) has been fixed at SG$1.75 or RM4.17 a share. The issue price was a discount of about 12.21pct to the five-day volume weighted average price up to and including Jan 19 of RM4.75 per share.
TEB has proposed to undertake a renounceable offer for sale its 626.18 million shares in Time dotcom Bhd (TdC) to TEB shareholders on the basis of eight offer shares for every 10 shares held in TEB.
The offer price would be not less than 20% to the five-day volume weighted average market price up to the day prior to the price-fixing date. However, it shall not be less than 48 sen per offer share.
Banks and plantations, which had rallied in recent months in tandem with the rise in the FBM KLCI to fresh record highs, could retrace if the foreign funds continue to take profit. However, their fundamentals remain intact in line with the firmer economic growth and strong crude palm oil prices.
According to Bank Negara Malaysia's (BNM) data released on Friday, its international reserves rose RM1.3 billion to RM329.9 billion (US$106.9 billion) as at Jan 14 from Dec 31, 2010 which was also in line with the inflow of funds into the equities market. The reserves position is sufficient to finance 8.8 months of retained imports and is 4.1 times the short-term external debt.
Property developer Hua Yang Bhd posted net profit of RM7.68 million in the third quarter ended Dec 31, 2010, up 180pct from RM2.74 million a year ago, boosted by better sales and improved profit margins. Revenue rose 81pct to RM49.30 million from RM27.27 million a year ago. Earnings per share were 7.11 sen versus 3.05 sen.
Meanwhile, CapitaMalls Malaysia REIT Managemenet Sdn Bhd, which manages the CMMT, is confident of achieving its objective of 7.45 sen distribution per unit amind the positive economic outlook in Malaysia. CMMT, a shopping mall real estate investment trust (REIT) recorded a total annualised DPU of 7.26 sen, exceeding its forecast of 7.16 sen.
The Edge weekly reports that a RM1,000 investment last year in education provider SEG International Bhd would be worth more than RM9,000 today, following a two-for-one share split and renounceable rights issue of warrants on the basis of one warrant for two subdivided shares.