Market Watch - Investors expected to remain cautious


  • Business
  • Saturday, 29 Mar 2003

BY P.W. THONG

UNCERTAINTIES over the US-Iraq war are likely to weigh down interests on the Kuala Lumpur Stock Exchange (KLSE) in the coming week. 

However, selective buying could occur later the week as investors position themselves ahead of the much-awaited broad ranging economic stimulus package to be announced on April 7. 

JF-Apex Securities dealing manager Peter Tai expects next week's trading to be range-bound, with the Kuala Lumpur Composite Index (CI) hovering between the 620 and 640 levels. 

“Investors are likely to be kept at bay as long as the time frame of the US-Iraq war remains a guessing game. However, things could start to look up if the US-led coalition forces can stage a good progress against the Iraqi troops,'' Tai says. 

Nonetheless, Tai notes the CI could close marginally higher next week should institutional funds decide to mop up certain counters that would benefit from the upcoming stimulus package.  

“The stimulus package will benefit certain sectors of economy more. While it's everyone’s guess on who will get more, fund managers might want to position themselves first before the good news is out,” Tai adds. 

In addition, he says the second board counters might also see some interests as the week draw nearer to April 7, the day when all second board shares would be traded in standard board lots of 100 units. Apart from second board shares, all new initial public offering, whether on the second board or main board, would also be traded in units of 100 shares per lot from April 7. 

Over the past week, initial optimism of a possible quick-end to the US-Iraq war was somewhat tarnished after increasing news reports of stiffer Iraqi resistance and rising casualties among US-led coalition troops. 

For the past week, trading in the local bourse has been tight, with the CI up marginally by 2.79 points or 0.4 per cent. Yesterday, the CI closed at 634.96 points. 

While the KLSE has shown resilience amid negative war news, stock markets elsewhere were less fortunate. The Dow Jones, which recorded its best weekly gain in more than 20 years in the previous week, has suffered some heavy losses this week. As of Thursday, the Dow Jones has lost 320 points or 3.8 per cent from its close on Mac 21  

On the local front, Bank Negara governor Tan Sri Dr Zeti Akhtar Aziz said on Wednesday that the central bank had revised its forecast gross domestic product growth to 4.5 per cent this year, compared with last October's budget forecast of 6.5 per cent. 

Zeti said the forecast of 4.5 per cent was the underlying growth potential of the Malaysian economy based on its fundamentals, expected modest growth of external economies, continued regional trade, and the flexibility to respond if the war in Iraq was prolonged. 

Meanwhile, the UEM-Renong Bhd group had on Thursday revealed its long-awaited final restructuring plan, which would see Renong being taken private and the streamlining of core business units under a new company to help the group trim debts. 

Genting Bhd and Resorts World Bhd share prices took a beating this week on concerns that the group’s hospitality business would be hurt by the on-going US-Iraq war and the outbreak of sickness caused by atypical pneumonia virus. 

On the other hand, British Amercian Tobacco (M) Bhd shares surged to near new highs after investors switched to defensive stocks from high beta and volatile stocks amid concerns over the war. 

Diversified conglomerate Tanjong plc has reported a 67 per cent jump in group pre-tax profit to RM521.4 million for the year to Jan 31, 2003, up sharply from RM311.6 million previously. Tanjong, whose business activities range from numbers forecasting to power generation, saw its net profit more than doubled to RM323.2 million during the year, while revenue rose to RM2.46 billion from RM2.1 billion. The company has also declared a gross dividend payment of 28 sen per share, payable on July 22. 

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