KUALA LUMPUR (Oct 2): The FBM KLCI could extend its gains on Tuesday and stay above the 1,640 level, given the positive investor sentiment after Budget 2013 was received favourably by investors in general.
Meanwhile, investors set aside worries over the growth outlook and Spain's debt problems on Monday, taking fresh positions in European equities at the start of the new quarter and selling safe-haven German bonds, according to Reuters.
Even evidence that the eurozone's economy is heading for the second recession in three years failed to dampen demand. Investors are hoping aggressive central bank action to boost economic activity will soon kick in, it said.
MIDF Research in a strategy note Monday said that the QE3, with its limited intensity, may not be enough to trigger a massive bull-run in risk asset prices.
However it would arguably be more than sufficient to support their underlying trends, it said.
“With that in mind, despite the recent retreat in local equity prices, we opine that, (i) the underlying market trend support would remain intact, and (ii) the local market would soon regain its upward momentum.
“Recall that in our earlier reports, we highlighted the fact that post-2008, risk asset prices tended to ‘kink’ downward towards the end of each liquidity programmes,” it said.
“We thus built in that observation into our earlier year-end target, whereby we projected that the FBM KLCI would retreated from its year-high of 1,670 points to a lower year-end target of 1,600 points.
“However, with QE3 in the picture, we would expect no price ‘kink’ to be forthcoming. Hence we revise our FBM KLCI 2012 year-end target from 1,600 points to 1,670 points (PER of 15.4 times CY2012 earnings). We nonetheless retain our FBM KLCI 2012 year-high target at 1,670 points,” said MIDF Research.
Among the stocks that could be in focus on Tuesday are Felda Global Ventures Holdings, TSR CAPITAL BHD [], “sin” sector stocks, IOI Corp Bhd and airline stocks.
Felda Global Ventures Holdings Bhd’s (FGVH) unit Felda Global Ventures PLANTATION []s Sdn Bhd has inked a non-binding Memorandum of Understanding (MoU) with Myanmar-based Pho La Min Trading Co Ltd to explore business opportunities in Myanmar.
In a filing Monday, FGVH said the MoU was to explore the possibility of collaborating with each other in Myanmar's rubber industries in particular rubber plantation, rubber processing and undertake feasibility and viability studies with the view of setting up of a joint venture company in Myanmar.
It said the MoU would remain valid for six months or such extended period as agreed in writing by the parties.
TSR Capital Bhd has received a grant of up to RM57.4 million from the government to facilitate the implementation of PD Waterfront in Port Dickson, Malacca.
The grant will be provided for under the facilitation fund agreement (FFA) between TSR’s wholly-owned subsidiary, TSR Ocean Park Sdn Bhd and the Public Private Partnership Unit, Prime Minister’s Department and Bank Pembangunan Malaysia Bhd.
In a filing to Bursa on Monday, the company said the grant will be used to facilitate upgrading works for the treatment of storm water drainage system and to supplement the CONSTRUCTION [] cost of a new ocean theme park, a hotel with 250 rooms, a convention centre and 100 units of water villa chalets.
Stocks in the tobacco, brewery and gaming sectors could extend their gains on Tuesday after being spared a tax hike in Budget 2013. These stocks were among the top gainers on Monday.
Plantation group IOI Corp Bhd received approval for the establishment of its Chinese property development arm, IOI (Xiamen) PROPERTIES [] Co Ltd as part of its plans to undertake a mixed-use development in the Fujian Province.
Airlines could be in focus after the International Air Transport Association (IATA) said on Monday that the world's airlines had raised their profit forecasts for 2012 and expect improved performance in 2013 as efforts by North American airlines to trim capacity have boosted margins and demand in Asia has held up despite a weak global economy.
IATA, which represents about 80% of global carriers, now expects the US$630 billion (RM1.9 trillion) airline industry to make a net profit of US$4.1 billion this year, up from an earlier forecast of US$3 billion but still less than half the US$8.4 billion achieved in 2011.