KUALA LUMPUR (Oct 10): The FBM KLCI could trend upward on Wednesday and eke out marginal gains as the International Monetary Fund's (IMF) gloomy global growth outlook could limit investors' appetite for riskier assets.
The IMF cut its global growth forecast on Tuesday to a 3.3% expansion for 2012, down from its July estimate of 3.5%, making it the slowest year of growth since 2009.
It warned US and European policymakers that failure to fix their economic ills would prolong the slump.
The IMF also said on Tuesday that China's economic growth is expected to weaken to 7.8% this year, warning of risks to emerging Asia if the eurozone crisis worsens and the United States does not avoid its "fiscal cliff".
The IMF had also forecast Malaysia's gross domestic product (GDP) to grow 4.4% in 2012 and 4.7% in 2013.
MIDF Research head of equity Syed Muhammed Kifni told theedgemalaysia.com that despite the IMF's less than cheerful outlook on the global economy, the research house nonetheless remained steadfast to its domestic GDP forecasts of 5.3% and 5.8% for this year and next respectively.
"As alluded in our 4Q12 outlook, we believe that the QE3, despite its limited intensity, would arguably be more than sufficient to sustain the underlying price trend of risk assets.
"With that in mind, we opine that the FBM KLCI secular trend support would remain intact going forward," he said.
Syed Muhammed said: "Moreover, our near-certitude is supported by the still rising tide of external liquidity, as attested by the continued inflows of foreign funds into the local bourse.
"However, as we have amply cautioned in our earlier reports, the ebb and flow of liquidity may still render the market vulnerable to short-term cyclicality, such which that occurred last month. We maintain our year-end target for the FBM KLCI at 1,670 points," he said.
Affin Investment Bank Bhd vice president and head of retail research Dr Nazri Khan in a note Tuesday said that going forward the FBM KLCI would trend higher on regional strength and local funds accumulation ahead of the general election and post-budget-2013 with focus on potential corporate tax cut to boost the country's competitiveness.
"The local benchmark should also get support from the traditionally bullish fourth quarter and positive external backdrops.
Among the stocks that could be in focus on Wednesday are TENAGA NASIONAL BHD [] (TNB); TELEKOM MALAYSIA BHD []; MISC BHD []; Pesona Metro Holdings Bhd; GADANG HOLDINGS BHD []; and LATEXX PARTNERS BHD [].
TNB has been awarded the bid for the new Combined Cycle Gas Turbine Plant in Prai. In addition, TNB Pasir Gudang has also been awarded a five-year extension to its first generation power purchase agreement (PPA).
Fitch Ratings has affirmed Telekom's Long-Term Issuer Default Rating and senior unsecured rating at "A-", respectively with a stable outlook.
In a statement Tuesday, Fitch said the ratings were notched up one level from Telekom's standalone "BBB+" rating to reflect actual and implied support from the Malaysian sovereign ("A-"/Stable).
Standard & Poor's Rating Services (S&P) has upgraded its outlook on MISC to stable from negative following news of the state-controlled shipping company's plans to monetise its oil and gas related assets.
"We revised the outlook on MISC because we expect the company to use the proceeds from a proposed asset sale to reduce leverage," said S&P's credit analyst Abhishek Dangra in a note Tuesday.
Last Friday, MISC said the shipping firm was selling a 50%-stake in Gumusut-Kakap Semi-Floating Production System (L) Ltd (GKL) to Petronas Carigali Sdn Bhd for US$305.7 million (RM935.8 million). Natinoal oil company Petroliam Nasional Bhd
(Petronas) owns 63% of MISC.
Pesona will be admitted to the official list of Main Market of Bursa Securities in place of MITHRIL BHD [], which will be delisted with effect from today (Oct 10).
Gadang Holdings has secured the Petrochemical Integrated Development (RAPID) Project site preparation contract worth a total provisional RM312.8 million.
The company had on Oct 5 accepted the Letter of Award dated Oct 4 from Petronas.
It said the contract was expected to contribute positively to its earnings for the financial years ending May 31, 2013 and May 31, 2014.
Latexx's securities could extend gains after surging on Tuesday, following Austria-based Semperit AG Holding's offer of RM2.30 per share and RM1.77 per warrant to takeover glove-maker Latexx, according to a statement announcing the RM603 million offer from the Vienna-listed company on Monday.
The offer of RM2.30 per share by Semperit's wholly-owned Semperit Investments Asia Pte Ltd is conditional upon Semperit gaining more than 50% of Latexx.
Latexx jumped 46 sen to RM2.25 while its warrants rose 40 sen to RM1.70 on Tuesday.