STOCKS on Bursa Malaysia staged a strong rebound yesterday, lifted by buying of blue-chip stocks while lower liners continued to attract heavy trading interest. At the close, the Kuala Lumpur Composite Index rose 10.62 points, or 1.2%, higher to 890.02.
A dealer said market confidence had been restored with the authorities making concerted efforts to restrict stock manipulation and that sentiment was further boosted when CIMB Bhd declared it would provide financing for shares considered non-marginable by other financial institutions and stockbroking firms.
The rise in the Dow Jones Industrial Index following US Federal Reserve chairman Alan Greenspan’s announcement that the world’s largest economy was on “firm footing” and inflation was “contained” also contributed to the local market’s performance.
The country’s biggest companies by market cap such as Malayan Banking Bhd (Maybank), British American Tobacco Malaysia Bhd (BAT) and Malaysian International Shipping Corp Bhd (MISC) continued to make it to the top gainers’ list yesterday. Maybank advanced 20 sen or 1.8% to close at RM11.20, BAT climbed 50 sen to RM43 and MISC gained 40 sen to RM17.90.
Analysts credited buying by financial institutions for the rise in the blue-chip stocks. “It's probably institutions acting on their buy program and buying blue-chip shares in large quantities.” an analyst said.
Another analyst commented that JP Morgan’s remarks on Bursa Malaysia’s limited downside risk and other favourable reports spurred local institutions to buy these shares. “The buying action may not be sustained as the market is only trying to catch up with other markets in the region,” the analyst said.
Another heavyweight that gained yesterday was Telekom Malaysia Bhd, which rose 30 sen or 3% to RM10.30.
It was earlier reported that the performance of Telekom's unit Celcom (M) Bhd had improved with a 10% quarter-on-quarter growth in its prepaid subscriber base.
Meanwhile, strong volatility among second- and third-liners, which occupied the top volume list, indicates that punters are back and hoping to make quick gains, according to two research houses.
“The high trading volume among small-cap stocks was most likely due to punters making a comeback,” said an analyst at a foreign-based research house.
“With more than 150 companies trading 30% lower than 2004 year-end prices, investors feel that it is time to look for opportunities,” OSK Securities said in a research note yesterday.
Analysts are looking at a possible 900 points for the market but do not expect it soon. “It is possible to reach 900 points where the market will turn bullish but probably not quickly as most investors are waiting to see interest rates go up,” an analyst said.
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