Kuala Lumpur shares close higher led by plantation, mining stocks - UPDATE 4/9/2006
- Share prices closed higher in thin trade with
the main index supported by interest in plantation and mining stocks on hopes
of stronger earnings growth next year, dealers said.
Investors also welcomed the government's budget proposals to cut the
corporate tax rate by two percentage points in stages over the next two years
to enhance the competitiveness of Malaysian firms, they said.
The Kuala Lumpur Composite Index (KLCI) finished the day up 7.53 points
or 0.78 pct at 968.22.
The FTSE Bursa Malaysia 30-large cap index was up 55.47 points or 0.89
pct at 6,276.25.
The second board index was up 0.04 points or 0.05 pct at 82.89.
The mining sector sub-index rose 26.43 points or 5.48 pct to 511.02 and
the plantation sector sub-index gained 83.62 points or 2.25 pct to 3,846.26.
Trading volume was 364.26 mln shares valued at 665.94 mln rgt.
Gainers outnumbered losers 378 to 342, with 310 stocks unchanged and 289
counters untraded.
Dealers said despite expectations that the proposed corporate tax cuts
will likely boost companies' earnings in the next two years, most analysts
are still rather bearish on the stock market outlook.
RHB Research said it is maintaining its KLCI year-end forecast at 880
points but has raised its target for 2007.
A one percentage point reduction in the corporate tax rate to 27 pct for
assessment year 2007 will increase the core net earnings per share growth for
the KLCI stocks by 1.2 percentage points to 13 pct for 2007, it said.
"This has the effect of raising our 2007 KLCI year-end target to 1,000
(points), from 960 previously," the research firm said.
Cheah King Yoong, acting head of research of SJ Securities said the
subdued trading volume was also due to weak sentiment among retail investors,
after a sell-off in lower liners last month.
Meanwhile, July trade figures are due out tomorrow amid concerns over a
possible global economic slowdown in the second half, dealers said. Exports
rose 11.4 pct year-on-year in June, according to official data.
In line with other economies around the region, which have seen export
growth momentum slowing recently, Malaysia is likely to experience slower
growth in the second half as well, said Teoh Kok Lin, managing director and
chief investment officer at Singular Asset Management.
"The flip side of the general pessimism regarding the market outlook is
that there would be greater chance to discover hidden value in the market,"
the fund manager said.
Among key blue chips, Maybank rose 0.10 rgt or 0.89 pct to 11.30, Telekom
Malaysia gained 0.10 rgt or 1.1 pct to 9.20, while Tenaga was steady at 9.25
rgt.
Genting was sharply higher on its solid earnings outlook for the second
half, rising 0.95 rgt or 3.83 pct to 28.75. Associated firm Resorts gained 0.
20 rgt or 1.72 pct to 11.80.
Builders Gamuda gained 0.12 rgt or 2.96 pct to 4.18 and IJM Corp rose 0.
10 rgt or 1.69 pct to 6.00, supported by the government's expansionary budget
for 2007, under which more construction projects are likely to be finalized
in the next 12 months.
British American Tobacco (BAT) was higher following the government's move
to raise the excise duty on cigarette products by one sen per stick, a
moderate increase compared with the previous year's increase. BAT was up 0.50
rgt or 1.19 pct at 42.50
JT International, another cigarette maker, ended the day unchanged at 4.
00 rgt.
Plantation stocks were broadly higher on hopes that higher crude palm oil
prices will likely boost the sector's earnings next year.
Among palm oil producers, IOI Corp rose 0.80 rgt or 4.73 pct to 17.70,
Kuala Lumpur Kepong gained 0.20 rgt or 1.74 pct to 11.70 and PPB Oil Palms
rose 0.15 rgt or 1.88 pct to 8.15.
Breweries were higher following the government's decision to keep the
excise duty on beer products unchanged, with Carlsberg gaining 0.05 rgt or 0.
99 pct to 5.10 and Guiness Anchor rising 0.10 rgt or 1.75 pct to 5.80.

For tomorrow...SHORT KLOFF...target 900 points near term...

For CPO market...target down to 1500 points...

Regard

Anthony Wong