THE Kuala Lumpur Composite Index (KLCI) managed to regain some lost ground yesterday as bargain hunters emerged to take advantage of the market's oversold position that had resulted from four consecutive days of falls.
The renewed buying interest lifted the benchmark index to a day's high of 827 points immediately after the lunch break. However, it lost steam in the late afternoon to close at 818.7 - just 8.6 points or about 1% above Tuesday's close.
Some local fund managers were net buyers as they moved in to pick up stocks whose prices had been beaten down lately.
But the buying was not heavy given the uncertainties that continued to cloud equity markets worldwide and the fact that most of local fund managers were almost fully invested, dealers said.
“The recent sell-down presents an attractive buying opportunity,'' said Pacific Mutual Fund senior investment manager Geoffery Ng, who believes the fundamentals of the local market are still intact despite the external worries.
He said concerns over an imminent increase in US interest rates and decelerating economic growth in China had been overblown. He conceded, however, that the current high crude oil prices did pose a threat to the global economy.
Fortress Capital Asset Management chief executive officer Thomas Yong concurred that the local market fundamentals remained intact. “There is hardly any evidence that things are deteriorating,” he said.
Yong said the market's recent sharp fall was mainly caused by liquidity flow movement as a result of portfolio adjustments.
News that Morgan Stanley Capital International (MSCI) will add six counters - Banda Raya Developments Bhd, CIMB Bhd, MAA Holdings Bhd, Malaysian Bulk Carriers Bhd, MK Land Holdings Bhd and Transmile Group Bhd - to its MSCI Malaysia Index effective May 28 helped to spur interest in some of these counters.
CIMB rose 35 sen to RM5.35, MAA Holdings gained 20 sen to RM5.40, MK Land went up 11 sen to RM2.95, and Transmile closed 40 sen higher at RM6.45.
Analysts said the rebound yesterday was in tandem with that of the regional markets, which had also suffered heavy sell-downs by foreign funds of late.
Tokyo's Nikkei 225 yesterday registered its largest gain this year, up 246 points or 2.3% to 11,153. Seoul's Kospi Index rose 26 points or 3.3% to 817 and Jarkata's Composite Index climbed 22 points to 740.
However, most analysts were of the view that yesterday's rally was a technical rebound that might not be sustainable, given the thin trading volume of 390.2 million shares recorded on the local market.
Property developer Golden Plus Holdings Bhd and plantation-based CepatWawasan Group Bhd were the two most active stocks of the day. Golden Plus rose 9.5 sen to 71.5 sen with 20.2 million share changing hands, while Cepatwawasan gained 18 sen to RM2.73 on volume of 12.45 million shares.
TA Securities analyst Stephen Soo said it was “difficult” to see a sharp recovery in the market given the prevailing cautious sentiment.
He expects stale bulls to start selling again once the KLCI touches the 830-level. “The market is likely to trade sideway in the near term,'' he added.