Business & Markets 2012
Written by Surin Murugiah of theedgemalaysia.com
Saturday, 04 August 2012 15:45
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KUALA LUMPUR (Aug 4): The FBM KLCI is expected to drift higher next week on the back of a firmer close at global markets last week, drawing on the resilience and defensiveness of the local stock market appeal during rising global risk aversion.
The FBM KLCI capped a tumultuous trading week, rising 10 points week-on-week to end last week on a positive tone. The FBM KLCI clawed back on Friday, reversing its earlier losses and ended 1.59 points higher at 1,635.04, gaining 10.1 points week-on-week.
Affin Investment Bank Bhd vice president and head of retail research Dr Nazri Khan said that global stocks were expected to price in further losses following the failure of Federal Reserve and European Central Bank (ECB) to give monetary stimulus (after their strong comments last week), more safe haven rotation was likely to happen this week which would benefit the FBM KLCI and other defensive indices such as Phillipines, Turkey and Mexico.
World stocks rallied, US oil jumped nearly 5% and the euro surged on Friday on news US employers increased hiring in July by the most in five months and on renewed optimism that Europe was closer to action on its debt crisis, according to Reuters.
Investors took a second look at Thursday's statement by ECB president Mario Draghi and concluded that help was on the way, even though it would take more time than many hoped, it said.
The US jobs report showed stronger-than-expected hiring but also a rise in the unemployment rate to 8.3%, which keeps alive the hope of further support for the economy from the Federal Reserve, said Reuters.
Among the stocks that could be in focus next week are Fraser & Neave Holdings Bhd (F&N M'sia), GEORGE KENT (M) BHD [], Malaysia Marine and Heavy Engineering Bhd (MMHE), building materials and speculative property plays.
A consortium headed by George Kent was the RM1 billion upgrading contract for the Ampang Line Extension Project, beating the likes of international giants Bombardier. Siemens, Balfour Beattty, Posco and Colas.
F&N M'sia, which rose to its all-time high last Friday, could again be in the spotlight after Singapore's Fraser and Neave Ltd (F&N) agreed to sell its stake in the firm for S$5.1 billion (RM12.84 billion) to Heineken. The purchase gives Heineken 82% of the prized Asia Pacific Breweries (APB) and it will now launch an offer for the rest of the company, while F&N, a drinks and property group, could be broken up eventually.
MMHE shares could trend lower after its net profit for the second quarter ended June 30, 2012 slumped 30% to RM55.32 million, compared to RM79.02 million a year earlier.
Building materials and select property stocks could be in focus following the launch of the RM26 billion Tun Razak Exchange (TRX) in Kuala Lumpur. Nazri said the local index was currently trying to shake-off a five day sideways consolidation range between 1,620 and 1,635 point levels. "Any breaks above 1,635 levels will lead to further upside towards 1,650 level while a breakdown below 1,620 level will suggest a gradual drift towards 1,600 psychological support level," he said.