Buoyant Q2 M'sia market seen

Analysts say positive sentiments will continue to push local bourse further into positive territory [You must be registered and logged in to see this image.]
PETALING
JAYA: Local equities market could steam ahead in the second quarter,
underpinned by corporate earnings growth, excitement from the Sarawak
state election and positive news flow domestically on the award of key
infrastructure projects. Analysts and fund managers said the positive sentiments would continue to push the local bourse further into positive territory. Alliance
Research head Soh Meng Hui expects the local bourse to rebound in the
second quarter after a relatively weaker first quarter due to events
such as the unrest in the Middle East and the earthquake in Japan. He said stocks had been down in the first quarter and there were not many surprises. However, Soh said the second quarter would provide more news flow and excitement. “The
catalysts include positive news flow, Sarawak election, talk of general
election and the implementation of Government Transformation
Programme,” he said, adding that Sarawak-related stocks would continue
with its run. Soh said timber stocks would draw interest as well due to the reconstruction of Japan. He added that the implementation of Economic Transformation Programme (ETP) would further improve market sentiments. “Retail
investors are back but investor sentiment will be even better with all
the positive development,” he said, adding that the research house had a
target of 1,650 points for the FTSE Bursa Malaysia KL Composite Index (FBM KLCI) this year. His top picks include KNM Group Bhd, Muhibbah Engineering (M) Bhd, Gamuda Bhd and Tenaga Nasional Bhd. OSK
Research head Chris Eng said: “We believe the fundamentals are intact
for FBM KLCI although there maybe some volatility in the second
quarter.” He said the expectation of a general election towards
the end of 2011 or early 2012, the realisation of ETP-related projects
and continued resilient earnings were among the catalysts for the
market. “We would recommend buying big caps for the market
rebound and going more defensive on small-caps stocks,” Eng said, adding
that the research house had a target of 1,680 points for FBM KLCI by year-end. MIDF Amanah Asset Management Bhd chief executive officer and chief investment officer Scott Lim opined that the second quarter would be statistics and news flow-driven. “The unexpected earthquake in the first quarter caused some volatility and panic selling. “Eventually,
the whole region recovered and it is a positive sign,” he said, adding
that inflation fear in the region had put some pressure on the market. Lim
said inflation in the region had worn off demand that could affect
gross domestic product growth but noted that eventually, Japan would
need to do major reconstruction following the recent earthquake. He
warned that any sustained market uptrend would still be affected by
external factors such as the performance of the US, European, Japan and
China markets. Lim said the Invest Malaysia 2011 conference to be
held this month could provide some positive news that could drive the
local market. Analysts and fund managers concurred that the
Sarawak election would provide a guidance if there would be an early
general election. It has been a dramatic first quarter for the
local bourse, just as it has been for the regional markets, with
unprecedented events such as the earthquake and tsunami in Japan and the
unrest in the Middle East. The benchmark index FBM KLCI has risen more than 26 points in the first three months to 1,545.13 yesterday. On Thursday, the index closed 13.5 points higher, with Genting Bhd being the leading mover, adding 42 sen to RM11.04. It was followed by Tenaga Nasional Bhd, which rose 19 sen to RM6.25. Other index-linked stocks that rose included IOI Corp Bhd, Petronas Dagangan Bhd, Genting Malaysia Bhd and CIMB Group. A total of 1.95 billion shares were traded with a turnover of RM2.56bil. Meanwhile,
Bursa Malaysia said in a statement yesterday that Bursa Malaysia
Derivatives Bhd's (BMD) contracts volume reached a record monthly high
of 856,791 contracts for March 2011, surpassing the previous record of
713,667 contracts in April 2009. BMD's leading derivatives
product, the Crude Palm Oil Futures contract, reached a historical
monthly high and broke another volume record at 619,326 contracts for
March 2011, surpassing the previous record of 451,843 contracts made in
November 2010.
(thestar)