THE KLSE closed higher for the third day in a row yesterday with a strong trading volume, but heavy profit-taking pared gains in the afternoon. The benchmark Composite Index (CI) ended an active trading day up nearly 10 points at 661.41.
A total of 592 million shares were transacted, up by more than a third from Monday’s volume of 427.2 million, which was already an eight-month high.
Describing the level of activity on the KLSE yesterday as “something we haven’t seen for quite a while now”, a stockbroker said the market was “healthier, with much larger participation than seen previously”.
The CI reached a high of 667 at midday on strong buying interest in key index and finance stocks, but slipped back in the afternoon as some investors decided to lock in their profits, resulting in losses for some counters.
Overall, however, gainers led losers by 407 to 281 while 199 counters were traded unchanged.
Analysts said that news of Valuecap Sdn Bhd’s entry into the market with a fund of RM10bil continued to buoy market sentiment yesterday.
“Valuecap’s impact on the market would be less financial and more sentiment,” said CIMB Securities Sdn Bhd head of equities Toh Hoon Chew. “The possibility of new funds entering the market is obviously making a lot of people very excited – it’s great.”
Since Valuecap’s announcement last Friday, the KLSE has surged ahead with the CI appreciating by 34.8 points or 5.5%.
Despite some heavy profit-taking yesterday, analysts pointed out that this was to be expected in a market which had not seen a sustained rally for quite a while.
“It is good to see some profit-taking and it’s healthy for the market,” said OSK Research Sdn Bhd senior manager Pankaj Kumar. “Compared with previous rallies which have not been followed through, there is much larger participation this round and trading volumes have built up very well.”
Pankaj said he was cautiously optimistic the rally would continue but added that the CI would first need to cross the next crucial level of 667.
CIMB’s Toh was also confident that there would not be sustained selling pressure and was bullish on the longer-term outlook for the domestic market. “At the current market levels, there’s a very good chance of making money,” he said. “The upside potential is very good,” he said.
Toh said that with so many value stocks on the KLSE, there should be renewed interest from foreign institutional investors this year as they were “underweight in Malaysia” following sell-downs since 1997.
Heavyweight index stocks were the most actively traded counters yesterday, with three finance stocks AMMB, Maybank and AmCorp making it to the top five most active list on news that Valuecap was picking up banking stocks.
Genting, which rose 70 sen to RM14.70, was the largest gainer yesterday, followed by MTD (up 35 sen to RM6.35) and Maybank (up 30 sen to RM8).