THE KLSE Composite Index (CI) resumed its ascent yesterday to end at the day's high of nearly 676 points in heavy trading, after recent good news revived positive sentiment on equities. Total volume for the day surged to a nine-month high of 633.4 million shares from 442.7 million on Monday.
Reports that the government would announce a programme to stimulate the economy by March and JP Morgan's prediction that the CI could touch 900 points this year brought punters back into the market.
More stocks are participating in the rally. Valuecap has limited the downside for the market,'' said the research head of a local brokerage.
Although the CI had succumbed to profit-taking on Monday, the benchmark index was up by 9.51 points by yesterday's close, with gainers overwhelming losers by nearly 10 to one.
Lower liners are in focus. The share prices of many of these stocks have been hammered down and people feel there is value in some of them,'' said another research head.
The vast majority of the most actively traded shares yesterday were penny stocks, which, some analysts say is a good thing for the market right now. Speculation helps generate interest in shares and keeps momentum going, they say.
While penny stocks may have dominated the list of most active stocks, it was the blue chips that predominantly moved the market up yesterday.
TNB rose 15 sen to RM9.45, Maybank gained 15 sen to RM8.15 and Maxis added 15 sen to RM5.70. Genting jumped 50 sen to close at RM14.60.
A banker said he expected mergers and acquisitions to dominate corporate activity this year.
A lot of excitement was created in the market a week ago when three deals were announced on the same day,'' he said. Merger and acquisition activity is back in business.''
Analysts said the biggest risk faced by the market was the impact of a war in Iraq but that would depend on the duration of the conflict.
No one knows whether it would be a long or short war. The market, however, is pricing in the prospects of war, said an analyst.
Stock markets in Asia were mixed yesterday with Tokyo and Bangkok, together with the KLSE, posting gains in excess of 1%.
Tokyo's Nikkei 225 closed up 149 points at 8,708 and the SET Index finished four points higher at 376. Hong Kong's Hang Seng Index ended the day 16 points up at 9,568 and Singapore's Straits Times Industrial Index closed two points higher at 1,365.
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