Malaysian shares likely to extend rally

Share prices on Bursa Malaysia are expected to extend their rally next week, boosted by positive sentiment emerging after the release of good first quarter corporate results coupled with further stimulus from global central banks, says Affin Investment Bank.

Vice-President, Head of Retail Research, Dr Nazri Khan said some interesting corporate exercises announced this week will likely spur some rotational play next week.

This includes AMMB's proposed acquisition of Kurnia Insurans Bhd to create a giant; Shell Malaysia signing a new exploration contract with Petronas in Sarawak as well as Ekuinas Nasional Bhd's acquisition of vessels from Tanjung Offshore to spur more mergers in the oil and gas industry.

He said impressive rebound from global equities and China's stock market would give more upside momentum to emerging markets including Malaysia.

"As China is the world's biggest importer of commodities, we reckon stronger Chinese stocks and the weaker USA dollar will lead to more commodity buying which in turn will benefit Malaysian stocks," he said.

Nazri also said the FTSE Bursa Malaysia KLCI (FBM KLCI) has quickly reclaimed the 1,600 psychological level, breached last week, and may also boost short-term local-sentiment.

The invesment bank also noted that several KLCI linked heavyweight stocks like Genting, Tenaga, Telekoms, Public Bank, YTL and Sime Darby, have successfully tested major support levels and showed resilience after having a decent market pullback.

Besides, the FBMKLCI rebound is being led higher by technology and plantation stocks, regarded among the most economically-sensitive sectors.

"The ability of the two sectors to bounce strongly are positive signs for the short-term broad market," Nazri said.

While the FBMKLCI showed upside promise, he said positive economic data helped push the index towards the short-term resistance level of 1,620.

Among positive and market friendly economic data scheduled to be released next week include the Consumer Price Index and Bank Negara Malaysia's international reserves standing.

However, he said the upcoming G7 meeting this week was crucial to offer some positive catalyst on the grouping's plan for action to relieve recent contagion fears about Spain and Portugal.

For the week just-ended, the market ended steady with the FBM KLCI closing 4.25 points higher at 1,603.12 against 1,598.87 registered last Friday.

The Finance Index dropped 41.53 points to 14,338.07, the Industrial Index slipped 3.15 points to 2,869.28 while the Plantation Index surged 69.57 points to 8,843.33.

On corporate results, Tenaga Nasional posted a net profit of RM2.81 billion for the second quarter ended Feb 29 after recording losses for three previous consecutive quarters.

The market was closed on Wednesday for the installation of the 14th Yang Di-Pertuan Agong, Tuanku Abdul Halim Mu'adzam Shah of Kedah.

Meanwhile, the FBM Emas Index advanced 30.77 points to 10,994.37, the FBM Ace Index added 1.29 points to 4,535.89, the FBM Mid 70 Index jumped 33.43 points to 12,086.4 and the FBMT100 increased 28.75 points to 10,793.71.

Total weekly volume declined to 4.638 billion shares, valued at RM5.913 billion, from last week's turnover of 5.41 billion shares worth RM6.23 billion.

The main market turnover also decreased to 3.132 billion shares, valued at RM5.673 billion, from 3.63 billion shares worth RM5.86 billion recorded last week.

Volume on the ACE market slipped to 1.126 billion shares, worth RM177.983 million, from 1.89 billion shares, worth RM241.61 million, transacted the previous week.

Warrants reduced to 365.327 million units, worth RM55.33 million, from 863.13 million shares, valued at RM115.35 million, exchanging hands previously. -- Bernama