After spending almost the entire day in negative territory yesterday, the KLSE Composite Index (CI) staged a sharp recovery minutes from the market's close to register a nearly two-point gain on late institutional support for selected blue chips.
The benchmark index ended 1.94 points higher than the previous day at 901.5 on moderate volume of just over 500 million shares. It had been down by more than five points for most of the day, and had even dropped by as much as 11points at one stage to a low of 888.2.
Dealers said similar late recovery by the CI had been seen in the past few trading days, with bargain-hunters usually emerging in the last hour to narrow the index's losses, if not push it higher.
They said without such support, widely believed to be from government-linked funds, the CI's fall could have been greater, given the larger number of losers versus gainers seen on those days.
Some retail investors and punters were also spooked by early morning news of a small explosive device being thrown from a speeding car at the Australian High Commission. The blast caused no injuries or damage to property.
Yesterday, more than 700 counters ended in the red, compared with only 160 that closed higher.
Pheim Unit Trusts Bhd chief executive officer Phua Lee Kerk said the broader market was currently consolidating on the gains achieved since the beginning of the year.
His view was shared by a senior dealing manager, who expects the CI to trade within a 20-point band – between 880 and 900 – for a while before attempting to go higher.
The dealing manager said although there was wide consensus that the CI could reach 1,000 points some time this year, it had already hit the target set for the first quarter ending March 31.
On the latest Bank Negara ruling, which allows unit trust management companies to invest abroad come April 1, Phua said this was not the reason that shares on the MSEB had experienced volatile trading of late.
He said the ruling came out only last Friday, and it was unlikely that unit trust management companies would have liquidated some of their share holdings and invested abroad so soon after.
Bank Negara's new ruling allows unit trust management companies to freely invest in foreign assets up to 10% of a fund's net asset value (NAV) subscribed by local residents, and up to the full amount of NAV for funds subscribed by non-residents. No prior approval is needed from the central bank.
In addition, unit trust funds of different companies may also be pooled to benefit from economies of scale when investing abroad.
Phua said that as a matter of prudence, any unit trust management company would first need to undertake thorough research and preparations before investing in any market. And that process was likely to take at least a month before fund managers could have a good idea of where and what to invest in.
He said the reverse was also true for foreign investors who intended to invest in Malaysia.
“Although there has been a flurry of reports from global research houses over-weighting Malaysian stocks, these global fund managers are in no hurry to invest here yet,” he said.
“No doubt, there is greater optimism about our stocks now, but the influx of foreign funds will only come when there has been enough homework done,'' he added.
As for fund managers' current take on MSEB-listed shares, one senior manager of a local asset management company said: “We have actually taken profit prior to the 11th general election. Now, we are just watching the market, waiting for a good time to re-enter it.”
Among yesterday's top gainers were Malaysia International Shipping Corp Bhd, which rose 30 sen to RM13.60; Malayan Banking Bhd, which gained 20 sen to RM11.60; and Golden Hope Plantations Bhd, which closed 16 sen higher at RM4.48.
Small-cap rubber companies continued to dominate the losers' list.