CNY rally still ongoing


  • Business
  • Saturday, 25 Jan 2003

By ERROL OH

DESPITE losing ground this week, the Chinese New Year rally is still expected to have its last hurrah at the Kuala Lumpur Stock Exchange (KLSE) next week. Observers say the market may get a boost from corporate announcements and continued investor interest following the entry of Valuecap Sdn Bhd. 

“It's too early to declare the rally dead,” says a research head. “The uptrend is still intact. And there may be more developments involving listed companies and the authorities. Those will definitely stir things up.” 

For example, there is persistent talk about more asset disposals by the Renong group. In addition, details of the next round of pump-priming measures are filtering through, and some of these may excite the market. 

Also worth noting is that there will be a string of extraordinary general meetings of companies in the Lion group, marking the resolution of one of the country's biggest debt headaches. It will be interesting to hear Tan Sri William Cheng's plans for his businesses. 

However, there are a few ifs and buts regarding the outlook on the KLSE's performance. The primary concern is that next week will likely be a turning point in the Iraq crisis. An alternative view is that investors will stay on the sidelines to await crucial developments. 

The world is keen to see what the United Nations weapons inspectors have to say about their first 60 days of checks in Iraq. On Monday, the inspectors will submit their report to the Security Council, which will discuss the document two days later. 

US President George W. Bush will deliver his State of the Union address to Congress on Tuesday. This too will surely yield indicators as to the Americans' preparedness for war. 

Finally, on Friday, Bush will meet British Prime Minister Tony Blair, his staunchest anti-Iraq ally, at Camp David. It is safe to say that by the end of next week, we will know if there is at all any chance of the US taking a softer stance on Iraq. 

This aside, a technical analyst says he sees the market continuing with the uptrend as long as the Kuala Lumpur Composite Index (CI) stays above 660 points. 

“This week's consolidation is a normal pullback as a result of the overbought position from last week. But the selling pressure has been absorbed well. The Valuecap factor remains influential,” he explains. 

It has been a mixed week for share investors. Monday saw the CI slipping four points. The market rebounded impressively the next day, with the benchmark index climbing to an intra-day high of nearly 676 points and volume surging to a nine-month high of 633.4 million shares. 

The rest of the week was a series of steps backwards. The CI ended the week at 669 points, 0.3 per cent down from last Friday's 671 points. Nevertheless, the index is still way up from the Jan 10 closing mark of 636 points. 

Major corporate events this week included the release of Malaysian Pacific Industries Bhd's second quarter results on Thursday. The numbers were below market consensus. Investors quickly showed their disappointment; the company's shares ended 80 sen lower on Friday. 

Throughout the week, Malaysian Resources Corp Bhd was a fixture in the daily list of 10 most active stocks. The company's bid to buy a 25 per cent stake in UDA Holdings Bhd is fast turning into a tussle. 

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