Market to trade on cautious mood

  • Business
  • Saturday, 15 Feb 2003


THE stock market may continue to trade on a cautious mood next week, with the benchmark KL Composite Index (CI) locked in a narrow trading range as investors continue to speculate on when the US-led coalition will strike Iraq. 

Overall, dealers and analysts expect little excitement on the Kuala Lumpur Stock Exchange in February although traditionally, the month is one of the best for the Malaysian stock market. 

One dealer says the lack of interest in equities was not only apparent to retailers, but also institutional funds, as all eyes are on the outcome of the US-Iraq standoff and its potential implications on world economies. 

“The continuing crisis in Iraq is weighing down sentiments on equity markets globally. Until that uncertainty is resolved, investors will continue to prefer holding on to cash or precious metals such as gold,’’ he says. 

Having said that, some dealers expect rotational interests on speculative and rumour-driven stocks to continue. 

Attention of investors in the local market will also be drawn to the corporate reporting season that will be in full swing this week. 

Investors may be able to take some comfort in the fact that the California Public Employees’ Retirement System (CalPERS) has decided to reinstate Malaysian stocks back into its emerging market portfolio investments in a meeting over the week.  

It was reported that CalPERs’ consultant, California-based Wilshire Consulting, has recommended the US$133 billion-pension fund to add Thailand and Malaysia into its list of emerging markets earmarked for stock investment.  

In addition, dealers says fund managers might start to adjust their portfolio investments once Bank Negara unveils the fourth quarter gross domestic product (GDP) performance on Feb 26. 

“Some fund managers are not doing anything pending the upcoming GDP announcement. They want to know how the central bank views the Malaysian economy, what measures it will take, and more importantly, they want to know which stocks will gain or lose from those measures,’’ says the dealer. 

Among the stocks that attracted interests was Mutiara Goodyear Development Bhd, which continued to rise despite market talks of a possible entry of a new substantial shareholder and proposed bid for a university campus project. 

The counter closed at RM2.07 yesterday. It had surged strongly, by 87sen, over its initial public offering price of RM1.20 in May last year. At current price levels, the property developer is seen trading at a rich valuation comparable to that of other bigger property developers such as SP Setia Bhd and IGB Corp Bhd

Of the major corporate developments over the past week, telecommunication company Bhd announced it had posted an after-tax profit of RM100.9 million for the financial year ended in December 2002, compared with RM158.9 million for the preceding eight-month financial period. 

YTL Power International Bhd entered into an agreement for a US$230 million, three-year syndicated loan facility with a consortium of financial institutions to part finance additional equity contribution to YTL Utilities Ltd, the holding company for Wessex Water Group.  

Malaysian Airlines System Bhd extended the service contract for chairman Tan Sri Azizan Zainul Abidin for another year to Feb 14 2004. The national carrier also retained the services of its managing director Datuk Md Nor Md Yusof for another two years to Feb 13 2005. 

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