Written by Joseph Chin
Friday, 22 January 2010 07:36
KUALA LUMPUR:Key regional markets are expected to slide on Friday, Jan 22 as investors turn cautious after the sharp overnight fall on Wall Street as US stocks suffered their worst one-day percentage drop since October.
US stocks fell on Thursday as US President Barack Obama proposed tough restrictions on banks that would squeeze profits. The Dow had its worst two-day percentage decline since June, while the Dow and S&P 500 had their worst one-day percentage losses since late October.
Goldman Sachs fell 4.1 percent despite posting stronger-than-expected 4Q results, and JPMorgan Chase & Co shed 6.6 percent.
The Dow Jones industrial average fell 213.27 points, or 2.01 percent, to end at 10,389.88. The Standard & Poor's 500 Index was down 21.56 points, or 1.89 percent, at 1,116.48. The Nasdaq Composite Index was down 25.55 points, or 1.12 percent, at 2,265.70.
In Sydney, Reuters reports Australian shares tumbled 2.2 percent on Friday to a one-month low, pressured by a decline on Wall Street and falls in mining stocks on concerns the Australian Government may change the way it taxes mining operations.
The S&P/ASX 200 index tumbled 106.1 points to 4,721.1 at 2312 GMT, its lowest level since Dec. 23. BHP Billiton Lt shares fell 3.0 percent to A$41.41 and Rio Tinto Ltd was down 3.6 percent to A$72.81, also pressured by weak commodities prices and a firm
U.S. dollar.
As for Bursa Malaysia, any heavy selling could provide buying opportunities for oversold stocks. Most importantly, investors should buy into resilient companies with strong management which would enable them to ride through difficult times.
OSK-UOB Unit Trust Management Bhd’s CEO Ho Seng Yee expects the FTSE Bursa Malaysia KLCI (FBM KLCI) index to climb near to 1,460 this year. His optimisim is based on the strong corporate earnings growth driven by the continued economic recovery.
Ho forecasts corporate earnings to grow 28% to 30% this year that will in turn lift the benchmark index by 14% to 15% from last year’s closing at 1,272.8. The FBM KLCI closed at 1,308.4 yesterday — the highest since March 2008, up 35.6 points or 2.8% year to date.
Stocks to watch on Bursa are Hong Leong Bank, EON Cap, Proton, telcos and Petra Perdana.
Hong Leong Bank offered RM4.92 billion for the entire assets and liabilities of EON CAPITAL BHD [] (EONCap), which owns EON Bank Bhd, representing an offer price of RM7.10 per share. EON Cap shares closed at RM7.10 on Thursday.
Shares of Proton Holdings rose 10% or 40 sen in the past two trading days bouyed by the positive sentiment surrounding the automotive sector. Expectation of higher car sales also helped to lend support to the counter.
As for Malaysia’s telecommunications companies, CIMB Research says they are expected to show a better fourth quarter (4Q) when they report their full-year results over the next few weeks.
“We believe that Malaysia’s telcos enjoyed higher profits in the fourth quarter of 2009, thanks to festivities, wireless broadband, subscriber growth and an improving economy.
“The chief beneficiaries were probably Celcom and Maxis. We do not expect nasty surprises and also do not rule out higher-than-expected dividends at DIGI.COM BHD [] and Maxis Bhd,” it said.
In oil and gas support service provider Petra Perdana, the Minority Shareholder Watchdog Group (MSWG) is playing an active role to ensure that the power tussle will not jeopardise minorities' interest.
As for YTL CEMENT BHD [], its unit YTL Cement Singapore Pte Ltd has made an offer to purchase Holcim Investments (Singapore) Pte Ltd's entire 55.87% equity stake in Jurong Cement Ltd (JCL) for S$61.9 million (RM148.98 million) or S$2.50 per share.