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Positive Sentiments Continue To Rule Market

THE Kuala Lumpur Composite Index has shown signs of life in recent times, allowing some hints of positive sentiment to emerge amongst investors. 

According to Teoh Cheng Guan, head of retail research at Kenanga Research, the recent rebound has exceeded his target, but is more or less in line with expectations.  

“The level to watch is the 1240-point level. If the market can move beyond that, I will have to reassess my target, otherwise I think the market will soon go into corrective mode,” he says.  

“In the short term, it will be a bit stretched. It won't be as drastic as the last correction...it might be slow and frustrating, but it isn't going to be as dramatic.”  

Good news for the property sector was announced earlier this week, as the Government announced that the real property gain tax is to be removed throughout the country on April 1. Those expected to benefit are high-end property owners and developers, while foreign nationals can look forward to less red tape.  

Stephen Soo of TA Securities has similar thoughts, noting that this announcement was long-anticipated and that the market has by and large factored this in.  

“We might see a correction ahead. The 1220-point level is a bit on the high side, so we're likely to see some healthy profit-taking commencing,” he says.  

“The market may come down to around 1200 points, in order to rebuild its base above that level.”  

Certain corporate players also received a boost following the announcement of certain measures and incentives at the Iskandar Development Region, which are generally viewed as being positive for the long-term economic growth of the country.  

TA Securities notes that stocks fell in the US after Motorola forecast a loss for this quarter, while the shakeout in the home lending industry continued. In the meantime, crude oil futures for May surged above US$61 a barrel following speculation that gasoline demand will increase in tandem with the summer driving season.  

On the corporate front, Plenitude Bhd is one of the stocks expected to benefit from the scrapping of the real property gains tax.  

Speaking at the Invest Malaysia 2007 event, Prime Minister Datuk Seri Abdullah Ahmad Badawi expressed hopes that the move would inject more excitement and dynamism into both the property and financial sectors.  

Along with certain other property players, Plenitude has emerged as one of the analyst fraternity's picks for the former sector. 

IJM Corp Bhd made headlines after reports that it plans to raise at least RM100mil from an initial public offering of Indian contracting and property business, which is expected to take place by the end of this year.  

India's government plans to spend as much as US$7bil on infrastructure this year, and Bloomberg reports that India is IJM's fastest growth market, accounting for 16% of the company's total RM1.5bil sales in 2005. 

Last but not least, Bursa Malaysia Bhd may benefit from the buzz of activity in the local bourse, along with its plans to implement direct market access (DMA) by the end of this year.  

DMA is an electronic trading solution that allows for real-time execution of trade orders by investors, providing greater speed and control over investment decisions. 

Source : The Star Business, Saturday 24 March 2007