ETP to bolster KL bourse's momentum

Bursa Malaysia's upward trend should stay intact this week, spurred by positive development coming from the economic and corporate sectors.


More announcements related to the Economic Transformation Programme (ETP) and economic reform news are expected during the first half of July. They will include the rehabilitation of the Klang river and ground-breaking ceremony of MRT project taking place this week.

These positive announcements will help to move shares, analysts said.

They expect the benchmark FBM KLCI, which broke the 1,577 resistance last week, to continue its momentum. Last Friday, the index closed the first day of the second half of the year at a record high of 1,582.94, surpassing Thursday's high of 1,579 points.

In its note, OSK Research said interest in local stocks places the index well on its way towards achieving the firm's year-end target of 1,680.

"Only the risk of unrest related to the planned rallies (now banned) on July 9 appears to be casting cloud over the July outlook. Even the global outlook has improved with problems in Greece appearing resolved until another day," OSK said.

The sluggish initial public offering (IPO) trend saw an upswing last week with the wake-up call coming from mega IPOs like sugar refiner MSM Malaysia Holdings Bhd and steel contractor Eversendai Corp Bhd.

This is expected to continue with the food and beverage group OldTown Bhd's listing on July 13 and Malaysia's biggest IPO this year, oil and gas group Bumi Armada Bhd's listing on July 21.

Foreign buying momentum has also seen a jump lately partly due to the interest in the ETP.

Bursa Malaysia's latest trading statistics indicate that foreign trading has risen to 30.4 per cent in terms of value after having been depressed since 2009.

"Market momentum is expected to remain positive this week before profit-taking sets in," said an analyst.

Focus stocks include from sectors like banks, construction, oil and gas and steel.

Pacific Mutual Bhd acting chief executive officer Gary Gan noted that while growth in Asia (excuding Japan) is expected to be significantly higher than the global average, there are various issues that may challenge or even derail the growth story in the immediate term.

This includes rising oil and commodity prices, potential monetary tightening, ongoing sovereign debt crisis in Europe, social-political tensions in the Middle East and the sluggish and uneven US economic recovery coupled with a severe China slowdown.