KLCI poised to break 1,800 points

KLCI poised to break 1,800 points
Business & Markets 2013
Written by Afiq Isa of theedgemalaysia.com
Tuesday, 23 July 2013 10:27

KUALA LUMPUR: The FBM KLCI is set to break 1,800 points this week on strong quarterly results from select blue-chips and improving global sentiment, according to analysts.

The composite index hovered above 1,800 points throughout most of yesterday, hitting an intraday high of 1,803.31, before paring down its gains at the close of trading. The index snapped a three-day streak of making new record closes by ending the day flat at 1,797.68.

Several companies that constitute the KLCI reported stronger quarterly earnings last week, with TENAGA NASIONAL BHD [] (TNB) and DIGI.COM BHD [] leading the blue-chips.

The utility giant posted a net profit of RM1.71 billion for its third quarter, beating analysts’ consensus expectations, thanks to the depreciation of the yen. TNB’s share price peaked at RM9.40 last Friday and closed at RM9.21 yesterday on profit taking.

DiGi reported a 17% rise in second quarter net profit to RM380 million on the back of stronger mobile Internet revenue. The telco’s shares gained three sen yesterday to close at RM4.63.

Most Asia-Pacific indices closed higher yesterday with Japan’s Nikkei gaining 68.13 points or 0.47%, while Singapore’s Straits Times Index jumped the highest with 21.09 points or 0.66%.

JF Apex Securities senior analyst Lee Cherng Wee said investors were encouraged by positive sentiments in regional markets yesterday, which resulted in the KLCI trading higher earlier in the day.

“Investors have also digested news that the US Federal Reserve will not put an abrupt end to quantitative easing (QE). Now that the QE uncertainty has been removed, retail investors have come back,” he said.

According to SJ Securities senior remisier Goh Kay Chong, retail participation continues to increase since the post-election market rally which began on May 6.

“There’s a cyclical play on second and third liner stocks,” he said, referring to emerging mid cap and small cap companies.

In a note yesterday, Maybank IB research said bearish technical indicators in the KLCI may cause investors to adopt a short-term trading strategy for the time being.

“The key resistance levels of 1,800 and 1,826 will see some profit taking activities. However, the index may attempt to test the resistance points very soon as US markets are making fresh all-time highs,” it said.

Both major US indices are reaching 52-week highs as key economic indicators point to an economic recovery which is in line with the Fed’s decision to taper off bond purchases starting next year.

Last Friday, the Dow Jones Industrial Average closed at a fresh all-time high of 15,543.74 on strong quarterly earnings by Citigroup, IBM and Goldman Sachs.

The S&P 500 Index gained 11.09 points last week to close at 1,692.09 last Friday, near its all-time high of 1,693.12.

Observers said the US markets will be driven by the current results season as more major corporations are set to disclose earnings this week.



This article first appeared in The Edge Financial Daily, on July 23, 2013.