KL shares likely to stage rebound

Share prices on Bursa Malaysia are likely to stabilise and stage a
rebound next week following the strong global overnight rallies driven
by the European Central Bank's (ECB) endorsement of unlimited bond
buying programme and strong US economic data, said Affin Investment
Bank vice president, head of retail research Dr Nazri Khan.

He
said ECB's highly-anticipated bond purchasing programme, which would
enable the central bank to address severe distortions in government
bond markets, would lend support and provide positive spillover to the
Malaysian stock market.

"Following the bullish performance of
the global stocks and the sharp correction on the local stocks, we
expect the FBM KLCI to stage an oversold rebound with 1,630 as the
immediate target.

"Ironically, despite the deep selling in the
local market, we see strong optimism at the external level driven by
the aggressive ECB's unlimited bond buying," he said today.

Nazri expect next Wednesday to be the next market-moving event where
Germany's constitutional court was expected to ratify the European
Stability Mechanism (new bailout fund) and lend fresh billions of euro
to struggling member states.

"On the local front, we observe
that the local market sell-off was driven by foreign fund outflow
possibly due to the SandP's warning of downgrading Malaysia's sovereign
credit rating.

"Given the oversold market situation, we expect the weakness to be temporarily stretched," he said.

On the local front, Nazri said, positive fundamentals remained intact
with accommodative central bank monetary policy, huge international
reserves, steady ringgit, tame inflation, continuous government
spending ahead of the election to provided limited downside risk.

"As for stock picks, given the seasonally-cautious September, we opt
for blue-chips that possess resilient business models and good
dividends to withstand further sell-off.

"These include telcommunications and consumer stocks such as TM, Maxis, DiGi, BAT, Padini and Dutch Lady.

"We are pegging the immediate support at the psychological 1,600 and
1,580 levels while immediate resistance between 1,630 and 1,655, the
all-time index high," he said.

On Thursday-to-Friday basis, the
market ended firmer with the FBM KLCI closing 6.56 points higher at
1,624.55 against 1,646.11 last Thursday.

The Finance Index
dropped 235.87 points to 14,509.81, Industrial Index fell 53 points to
2,818.39 and the Plantation Index lost 190.96 points to 8,415.63.

The FBM Emas Index fell 156.86 points to 11,072.68, FBM Ace Index
dipped 149.55 points to 4,442.08 and the FBM Mid 70 Index fell 183.55
points to 12,252.53.

Weekly volume rose to 6.63 billion shares worth RM8.52 billion from 5.09 billion shares worth RM5.18 billion last Thursday.

Main market volume increased to 3.77 billion units valued at RM8.08
billion from 2.97 billion units valued at RM4.78 billion previously.

Volume on the ACE market increased to 2.53 billion shares worth
RM407.04 million from 1.85 billion units worth RM377.1 million last
week.

Warrants declined to 288.45 million units valued at
RM21.87 million from 229.81 million units valued at RM22.17 million
last week. -- BERNAMA