AN upgrade in Malaysia's credit rating plus continued interest in blue chips lifted the KLSE Composite Index (CI) yesterday to its highest level in nearly 17 months.
Analysts now see breaching the 780-point mark as the next target if the CI were to test the important 800-point barrier in the weeks ahead.
The market, which moved up six points on Tuesday on buying interest in blue chips, once again saw investors snapping up heavyweight CI-linked counters after Standard & Poor's (S&P) upgraded Malaysia's long-term foreign currency rating to A- from BBB+.
Surprised by the sudden upgrade, investors flocked to blue chips, sending the benchmark index up a further 1.5% to 759 points.
Volume surged to 821 million shares from 614 million on Tuesday, and the total value of transactions for the day swelled to RM1.63bil, the highest level since RM1.99bil worth of shares changed hands on July 3.
Analysts also attributed the market surge to a re-rating of Malaysian shares, which have underperformed those in the rest of the region since the start of the year.
“It's about time for us to show our true colours,'' commented TA Securities head of research Ngu Chie Kien.
Underscoring the interest in blue chips, Commerce Asset-Holding Bhd topped the day's most active list with 22.5 million shares traded. The counter closed up 14 sen at RM3.86.
Among the heavyweights which also had a strong day were Malayan Banking Bhd and Telekom Malaysia Bhd, both of which rose 20 sen to close at RM9.70 and RM7.80 respectively. Tenaga Nasional Bhd ended unchanged at RM9.25.
It was such a good day for blue chips that only one stock – Petronas Gas Bhd – among the top 20 CI-linked counters ended lower. And only six counters among the top 50 CI stocks fell.
Crest Petroleum Bhd was yesterday's top gainer, rising RM1.20 to RM14 ahead of its announcement of a joint venture with Norway's Smedvig to undertake offshore drilling.
Shares of property firm Asas Dunia Bhd hit limit-up in afternoon trade, and closed up 40 sen or 52% at RM1.16.
K&N Kenanga technical analyst Teoh Cheng Guan said his first target zone for the CI was between 769 and 780 points.
“The 780 level is key. If the market takes that out convincingly, then 800 should not be a problem,'' he said.
Analysts say the earnings reporting season now under way in the United States would also be a key factor. Expectations are that US companies would be reporting favourable earnings given that there had been few pre-announced warnings.
Trading was mixed elsewhere in Asia yesterday. Stocks in Thailand and Indonesia surged after S&P upgraded the two countries' credit ratings, but Japanese shares sank after the yen rose to 109 against the US dollar.
Bangkok's SET Index rose 3% to 560 and Jakarta's Composite Index closed 1.5% higher, but the Nikkei 225 ended down 2.6% at 10, 542 as the yen's strength cast fresh doubts on the earnings prospects of Japanese exporters.
Hong Kong's Hang Seng Index ended basically unchanged at 11,720 points while Singapore's Straits Times Index closed 0.7% higher at 1,733.