A SPECTACULAR rally in oil and gas stocks yesterday spilled over to the rest of the market, helping to arrest an ongoing consolidation and pull the KLSE Composite Index (CI) up 8.7 points or 1.28% . The CI closed at the day's high of 691 points on heavy volume.
The play on the oil and gas stocks spurred retail interest in lower liners, which in turn sent the second board up 4%.
It is quite timely. The market has been in consolidation for a week and something was needed to bring back interest to the KLSE,'' said TA Securities head of research C.K. Ngu.
Volume yesterday ballooned to 639 million, valued at RM942.7mil, from 377.3 million shares valued at RM525.5mil on Thursday.
Attention was drawn back to the stock market as escalating share prices of at least two companies involved in the oil and gas business reeled in retail investors.
The performance of second board counter SCOMI GROUP BHD and main boardlisted Petra Perdana Bhd had bucked the consolidation on the KLSE, rising stunningly over the past two weeks.
Scomi has been on an overdrive, surging 95% from RM2.58 on June 12 to RM4.78 yesterday. The stock has rocketed to 2.5 times its initial public offering price since the company's listing on May 13.
Petra Perdana's share price was, however, the first to move. It has risen from RM2.21 on June 4 to RM2.85 on June 12, and it closed at RM3.90 yesterday, for a 76% rise since June 4.
Genting Bhd, which has major interests in the oil and gas division, found its shares rising 30 sen to RM14.60.
Analysts said that rumours of an impending large contract from national oil company Petroliam Nasional Bhd could be the reason for such activity among the oil and gas stocks.
Another reason was the potential spin-offs from the discovery of huge oil reserves in east Malaysia, first reported on Aug 5, 2002.
Details of the oil find at the Kikeh prospect in Block K were sketchy then but over the past few months, reports shedding more light on the discovery have slowly filtered into the market.
The find in disputed waters is reported to be the largest over the past decade, with recoverable reserves projected at 400 million to 700 million barrels of oil. Malaysia's recoverable oil reserves have been estimated at four billion barrels, although total reserves, mainly sited offshore in the South China Sea, could be much more.
Analysts say the influence of Wall Street's overnight performance, especially that of Nasdaq, could have been another factor for the gains on the KLSE.
The Dow Jones Industrial Average rose 0.75% to 9,079 and the tech-heavy Nasdaq jumped nearly 2% to 1,634.
In Asia, Tokyo's Nikkei 225 jumped 2%, Singapore's Straits Times Index rose 1.35%, and Hong Kong's Hang Seng climbed 0.5%.
Although mid-year window-dressing could be a factor in the KLSE's performance yesterday, analysts attributed the turnaround in trading activity to increased retail interest in the KLSE and the continued easing of trading charges over the past few weeks, especially for margin account holders.
The better volumes could be due to commission rates being lower,'' said K&N Kenanga head of research Seow Choong Liang.
Yesterday's sharp gains have pushed the CI close to a modest resistance level, pegged at 695. Analysts say the CI could face heavy resistance at 700 points, with strong support pegged at the 680-point level.
The market is still far away from an overbought position. The market internals are very strong,'' said OSK Research technical analyst Shin Kao Jack.
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