Bursa KL: Playing God Again?

Caution Suggested

With the Greek problem coming to an end, broking houses have turned oraclers and prophets again conjuring new levels for Bursa KL.

This chap from Affin Investment Bank has predicted that the weather forecast is going to be good with clear skies all the way from Wall Street and the Eurozone. He expects the Bursa to chalk new heights by hitting 1,600 points this coming week. His underpinnings? Strong local and better global economic data.

Largely driven by the optimism that the Greek problem is about to end, Dr Nazri Khan of Affin Bank expects strong funds inflow on prospects of added liquidity from major central banks and rising global equity market.

"We believe the long awaited news that Greek politicians had reached a deal on austerity measures, may pave the way for the country to receive a second bail-out and avoid a disorderly default on its debt.

"In addition, we anticipate the global markets to be further supported from easy interest rate policy decisions announced by European central banks and the Bank of England last week," he added.

Envisaging 'outperformance' from emerging markets, he believes this is an additional boost to local shares over the near-term. "Going forward, we expect the local market to extend its gains following the strong bullish breakout last week, boosted by gains in selected blue chips and strong rotational plays in lower liners," he remarked.

The ringgit's rally and the FBM KLCI's steady gains suggest that the broader market risk appetite on the local assets has improved.

Nazri said that any breakout above the 1,565 points mark could pave the way for further gains towards the all-time FBM KLCI high of 1,597 points level.

For the week just-ended, the local bourse experienced positive sentiment for the three consecutive trading days.

"The highest single-day trading volume, thus far, since the year began was recorded on Wednesday at 4.39 billion shares, a level last seen in February 2007," an analyst said.

However, he said slow progress on Greece's debt talk influenced sentiment on the local bourse which saw the FBM KLCI gaining on Wednesday and Thursday on active retail participation in penny stocks and selected blue chips.

Profit taking emerged on Friday to trim earlier gains.

On a weekly basis, the FBM KLCI increased 22.89 points to 1,561.66, the Finance Index surged 272.1 points to 13,859.41 and Industrial Index rose 30 points to 2,901.28.

The Plantation Index advanced 140.36 points to 8,878.28, the FBM Emas Index jumped 149.97 points to 10,883.76, FBM Mid 70 Index perked 85.3 points to 12,491.83 and the FBM ACE Index chalked up 208.96 points to 4,745.59.

Total weekly volume increased to 11.06 billion shares, worth RM9.08 billion, from 9.52 billion shares, worth RM9.2 billion, registered last week.

The Main Market turnover improved to 7.45 billion units, valued at RM8.5 billion, from 5.29 billion units, valued at RM8.54 billion, recorded previously.

Warrants advanced to 1.43 billion shares, worth RM252.71 million, from 1.38 billion shares, worth RM431.1 million, transacted last week.

Volume on the ACE Market rose to 2.16 billion units, valued at RM322.42 million, from 1.38 billion shares, valued at RM224.85 million, registered previously.

For me, I will be a bit cautious as rotational penny stock play just adds to volume but little to value. Any denial for a disclosure on unusual market activity will get the usual proforma answer that there is no corporate development and that will sink that stock, sometimes by 30%. Look at Maybulk, as an example.

Lately, Compugates, Metronic and its ilk has been given the push. I think this is a sure sign of building up the war chest for the impending 13 GE by parties acting in concert. So, do not be a sucker and get in on an adrenalin rush, for you may be caught holding a ‘hot brick’!

When the opportunity arises, buy into good blue chips such as CIMB,LPI, Genting Berhad,Sime Darby, KLK, Boustead,Nestle, Digi.Com,Mesiniaga,Kencana and MBSB.