THE stock market welcomed the smooth transition of political leadership yesterday with the KLSE Composite Index (CI) closing five points higher at a 38-month high of 817 points despite bouts of profit taking.
Dealers said the CI slipped to negative territory for a short while when heavy profit-taking emerged in the afternoon session. However, late buying on selected heavyweight blue chips helped lift the benchmark index back into the positive zone by the close of trade.
Mayban Securities head of dealing Wan Ahmad Satria said institutional investors, including foreign money managers, were taking positions in the market and that retail participation was getting more active.
“Retail interest has contributed to at least half of the trading volume now,'' he added.
Trading volume was heavy at nearly 1.3 billion shares compared with one billion a day before. The number of shares traded on the KLSE has now exceeded the one billion mark for three consecutive days.
Lower liners dominated the most active list yesterday. The top three most actively traded counters were AWC Facility Solutions Bhd, which rose 26 sen to RM1.68; Furqan Business Organisation Bhd, which gained six sen to 62 sen; and Tanah Emas Corp Bhd which added 34 sen to RM4.68.
Dealers had anticipated profit-taking, with the KLSE’s sharp gains in recent days, and the cashing in on profits again next week after the CI had put on 84 points or 11.5% and the Second Board Index 23 points or 18.6% in October.
“The market will retrace from the current high level in the next one or two weeks. Investors need not worry because it is going to be a mild one,'' said SBB Securities senior analyst Ng Jun Sheng.
“Investors should utilise the correction to accumulate blue chips in order to ride on the uptrend that will be triggered by year-end window dressing activities,'' he added.
TA Securities technical analyst Stephen Soo concurred, saying profit-taking was healthy as the market was now overbought. He pegged the 800-point level as a strong support territory.
He, however, expects the CI to test the 840-level this month and to reach 880 by year-end.
While the KLSE has been basking from the solid performance of second-line counters and a spectacular rally in the oil and gas stocks, another development could lead to added interest in Malaysian counters.
Morgan Stanley downgraded its recommendation on Hong Kong and Singapore equities to “underweight” from “overweight” last week, prompting analysts here to suggest that some of the money taken out of those two countries could find a home in Malaysia.
SBB Securities' Ng expects foreign fund managers to re-adjust their portfolio as a result of the re-rating.
Even though money pulled out from Hong Kong and Singapore may not come to the KLSE, it is expected to remain in Asia and help push the index or indices or Asian bourses. Analysts say this would, in turn, see the KLSE play catch-up once again with other regional exchanges that could benefit from an inflow of foreign funds.