Penny stocks in play again

Penny stocks may rally up to the Chinese New Year to
usher in the coming of the Year of the Dragon, the mightiest of signs in
the Chinese zodiac, analysts said yesterday.



Penny stocks are securities that trade below the RM1 mark.


"There is a good chance for penny stocks to rally up to the Chinese New
Year. There is plenty of liquidity in the marketplace, coupled with low
interest rates," said Pong Teng Siew, the head of research at Jupiter
Securities.

Yesterday penny stocks such as Xidelang Holdings
Ltd, Wijaya Baru Global Bhd, Proton Holdings Bhd call warrants and
JCY International Bhd warrants dominated trading on Bursa Malaysia.

Xidelang closed 4.5 sen higher at 41 sen, Wijaya warrants were up
three sen to 39.5 sen, Proton CL call warrants rose 6 sen to 21 sen,
while JCY CD call warrants ended the day eight sen higher at 66 sen a
share.





Unlike previous penny stock rallies, this time around most of the penny
stocks that have gone up have some form of corporate activitivies
linked to the companies.

For example, Wijaya has been active
ever since Major (rtd) Anuar Adam bought 32.02 per cent of Wijaya from
Datuk Tiong King Sing at 95 sen a share.

JCY, meanwhile, has
been very active for weeks, and the company this week said that net
profit for the first quarter ended December 31 2011 would likely jump
nineteenfold year-on-year from the RM7.5 million booked in the first
quarter before.

The Proton call warrants have been active as
there is constant speculation in the market that Khazanah Nasional Bhd
will sell its 42.7 per cent stake in the national carmaker.


"Yes. Wijaya, Proton and JCY have piqued interest in the market, but
there is also a lot of emotion-based trading on penny stocks," said
Edmund Tham, Mercury Securities head of research.

Tham said that JCY earnings forecast is really an eye-opener, which made investors chase its shares.

Elsewhere, Pong also noted that the renewed interest in the stockmarket
among retail players has been helped by some active buying by foreign
funds.

Foreign investors bought Malaysian stocks for a third straight month in December, the longest winning streak since July.

The funds purchased a net RM800 million of Malaysian shares last month, according to data on Bursa Malaysia's website.

They bought RM700 million of stocks in November and RM1.5 billion in October.

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