Kuala Lumpur shares close firmer on Budget corporate tax reduction plan -
UPDATE 1/9/2006
- Share prices closed firmer as investors
welcomed the government's move to reduce the corporate tax rate by 2
percentage points in stages over the next two years under the proposed
national budget for 2007, dealers said.
Prime Minister Abdullah Ahmad Badawi said in his budget speech in
parliament that the government proposes to cut the corporate tax rate to 27
pct for 2007. Another one percentage point cut will be undertaken for the
following year. He said the move is aimed at enhancing the competitiveness of
Malaysian firms.
Dealers said the market is likely to firm further next week after
investors have fully digested the news of Budget 2007.
The Kuala Lumpur Composite Index (KLCI) closed at 960.69, up 2.57 points
or 0.27 pct from Wednesday. The market was closed yesterday for a public
holiday. For the week, the KLCI gained 10.17 points or 1.07 pct.
The FTSE Bursa Malaysia 30 large-cap was up 6.93 points at 6,220.78,
while the second board index was down 0.33 points at 82.85.
Dealers said a note of caution still lingered among minor stocks. Losers
outnumbered gainers 369 to 340, with 313 counters unchanged and 297 stocks
untraded.
Trading volume was 408.88 mln shares valued at 924.29 mln rgt
"The decision to lower the corporate income tax came as a suprise and it
would definitely have a positive impact on the bigger companies," MIDF
Sisma's equity economist Imran Nurginias said.
He said this will allow companies to reinvest more of their income and
boost private investment, which could spur economic activity.
"This will also help to cushion (any) fall in consumer spending," Imran
added.
He views the budget as expansionary and sees it postively affecting
investment and pump-priming the economy.
A local brokerage dealer said strong follow-through buying in blue chips,
especially from local institutional funds, are expected next week after
investors have fully digest the budget during the weekend.
He added that the lower-than-expected hike in tax duties on tobacco and
liquor will likely see companies like BAT Malaysia and Guiness Anchor
sustaining gains into next week.
TA Securities said in note to clients that the country's
stronger-than-expected second-quarter GDP growth of 5.9 pct compared with the
market consensus of 5.6 pct growth should also boost sentiment and push
selected blue chips higher.
According to TA, construction and transport-related stocks such as KBES,
MRCB, UEM Builder and UEM World should attract further interest on hopes they
will benefit from the governments 10 bln rgt plan to expand the Klang Valleys
light rail transit system in the next four years.
Among key blue chips, BAT Malaysia was up 0.50 rgt at 42.00, Genting
advanced 0.20 rgt to 24.80, Maxis Communications rose 0.20 rgt to 9.00 and
Tanjong PLC gained 0.10 rgt to 13.30.
Wonderful Wire & Cable was sharply lower by 0.025 rgt or 6.49 pct to 0.
36, after the company was reprimanded and fined by the stock exchange for
failure to disclose its results on time.
Asiatic Development was up 0.06 rgt at 3.74, despite the plantation firm
posting weaker interim results.
Guiness Anchor rose 0.05 rgt to 5.70, despite expectations that the
government may raise taxes on brewery firms when the prime minister presents
the Budget to parliament later today.
Resorts World was down 0.30 rgt at 11.60, after posting a 45.8 pct fall
in its net profit for the second quarter to June.
Malaysia Airlines was flat at 3.02 rgt, despite the national carrier
posting a narrower net loss for the second quarter to June, dealers said

For next week...SHORT KLOFF...target 900 points near term...

For CPO market...Short CPO to 1500 points...

Regard


Anthony Wong