Business & Markets 2012
Written by Surin Murugiah of theedgemalaysia.com
Saturday, 07 July 2012 15:02
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KUALA LUMPUR (July 7): The FBM KLCI is expected to continue to rack up its gains next week, despite the relatively gloomy external environment.
The benchmark index rose to close at its all-time high last Friday, going against the prevailing sentiment at global markets.
Last Friday, stocks fell, the euro hit a two-year low against the dollar and oil slumped more than 3 percent on Friday after disappointing U.S. jobs growth reinforced worries the American economy was mired in a slow-growth rut, according to Reuters.
The U.S. Labor Department reported that employers created only 80,000 jobs in June, far fewer than needed to bring down the 8.2 percent unemployment rate and adding to evidence that Europe's debt crisis was weighing on global growth, it said.
Affin Investment Bank Bhd vice president and head of retail research Dr nazri Khan said that despite the negative global economic data, the FBM KLCI would have more upside next week (albeit with a more volatile session due to active global economic calendar, tracking two-months-high commodity rebound and two-months-high liquidity driven swings of Wall Street & European indices.
Among the stocks that could be in focus are Fajabaru Builder Goup Bhd, automotive players, Petronas Gas and TENAGA NASIONAL BHD .
The Edge weekly in its latest edition reported that after having been in the CONSTRUCTION  business for more than 38 years, Fajabaru was moving into property development.
“it is a natural progression for any construction company to go into property development. We have the knowhow and we can manage costs. This is Fajabaru’s new phase of growth,” the Edge cited the company’s managing director and CEO Datuk Low Keng Kok as saying.
Meanwhile, AmResearch in a market strategy report report last Friday rated Petronas Gas and Tenaga as buys.
The research house said it expects Petronas Gas to reach an inflection point in earnings growth with the 530mmscfd Malacca regassification commencing operations in September this year.
“Tenaga is a Buy with a discounted cash flow (DCF)-based fair value of RM7.35.
“We expect stabilising natural gas supply from the Lekas regassification plant in Malacca by September this year to provide clearer earnings visibility,” it said.
AmResearch also said the recovery in auto sales first evident in May 2012 would continue in the coming months.
“More importantly, we believe transformational growth is also taking place in UMW and MBM. The former is fast morphing into a dominant oil & gas player with an associated lift to PE.
“MBM is emerging as a major auto parts maker, having completed its acquisition of air-bag player Hirotako and establishing an alloy wheel plant,” it said.