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29th September, 2008
SHARE PRICES on Bursa Malaysia are expected to be mixed this week amid the shorter trading week due to the Hari Raya celebrations, said dealers.
Bursa will be closed on Wednesday and Thursday.
Dealers said the benchmark Composite Index (CI) is likely to stay above 1,000 points despite the gloomy global economic outlook led by the US recession.
“In the current sluggish market, interest will be confined to selective stocks which have specific corporate developments,” they said.
According to a dealer, local market fundamentals remained intact with a moderating inflation, lower interest rates as well as minimal changes in growth projections.
The dealer said inflation has peaked and is expected to moderate.
The headline inflation rate was unchanged at 8.5 percent in August — 8.5 percent in July and 7.7 percent in June—although it was slightly higher than market consensus of 8.4 percent, he added.
The latest fuel price adjustment would reduce inflation further and thus, “it is unlikely that the authority will increase interest rates.”
The government reduced fuel prices by 10 sen during the week just ended.
“Chances of rates cut are slim as the present monetary policy stance remains accommodative and supportive of domestic demand,” he said.
In addition, the government said on Thursday that Malaysia is on track to achieve the targeted 5.5 percent or 5.7 percent gross domestic product (GDP) growth if there are no more disastrous news from the United States.
Bank Negara has forecast a GDP growth of 5.5 percent while the Finance Ministry has predicted 5.7 percent.
Investors, at large, would closely monitor the progress on Washington’s US$700 billion massive plan announced last Sunday.
The package will bail out debts from banks to prevent more bank failures and counter the deepening recession.
“Confidence is there in the market as the US Congress has reached a basic accord on the terms of the bailout package,” he said.
“They will also need to speed up the implementation of the package as Washington Mutual has collapsed, considered the largest failure in US banking history,” the dealer said.
The Seattle-based institution had invested heavily in the mortgage market.
Back home, the government had on Monday said that it will not be repegging the ringgit, citing that the ringgit was relatively stable and that it reflected the real value of the currency.
It was in response to former premier Tun Dr Mahathir Mohamad’s suggestion last Saturday, to repeg the ringgit in order to cushion the economy against the prevailing weak global economy following the US financial crisis.
Dr Mahathir however had on Thursday suggested all Malaysian trade payments be made in the ringgit denomination.
He said conducting trade in ringgit would keep the currency in constant demand and its value would be stable at a certain level.
Elsewhere, the local geo-political development has somewhat affected the market this week, putting some investors on the sideline.
The Umno general assembly, scheduled for December, has been postponed to March next year.
This was announced by Prime Minister Datuk Seri Abdullah Ahmad Badawi after chairing a special meeting of the Umno Supreme Council on Friday.
“Investors might have to digest the development before deciding to place positions in the market next week,” he said.
On a Friday-to-Friday basis, the KLCI fell 5.17 points to 1,020.53, remaining above the 1,000 level after plunging almost 40 points to around 900-point level on Sept 18.
The Industrial Index went down 29.26 points to 2,231.70, the Finance Index dropped 24.47 points to 8,261.82 and the Plantation Index slipped 167.70 points to 5,002.44.
In the Financial Times Stock Exchange-Bursa Malaysia (FTSE-BM) Index series, the FBMEmas went down 26.87 points to 6,761.72, the FBM30 declined 25.60 points to 6,572.20, the FBM2BRD shed 37.17 points to 4,996.47 and the FBMMDQ slipped 21.90 points to 3,957.23.
Total volume for the week decreased to 1.930 billion shares worth RM3.557 billion compared with 2.213 billion shares valued at RM4.865 billion.
The Main Board volume eased to 1.657 billion units worth RM3.490 billion from 1.930 billion units valued at RM4.794 billion previously.
Volume on the Second Board advanced to 93.257 million shares worth RM45.928 million versus 92.074 million shares valued at RM44.779 million the week before.
On the Mesdaq market, volume fell to 66.606 million units worth RM16.042 million from 95.193 million units worth RM22.119 million previously.
Call warrants decreased to 112.755 million shares worth RM5.143 million from RM115.993 million shares valued at RM4.263 million last week.
Direct business deals improved to 413.968 million units worth RM636.851 million from 134.044 million shares valued at RM119.150 million previously.
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