Local market and Hong Kong rebound

  • Business
  • Wednesday, 22 Apr 2009

KUALA LUMPUR: In morning trade, the local market is recovering strongly from yesterday's negative close with the KLCI moving up as much as 8.47 points hitting a high of 975.07.

At 10.20am the benchmark KLCI stands up 7.19 points to 973.74.

Among major regional indices in positive territory is Hong Kong's Hang Seng up 29.81 points 0.2% to 15,315.70 and the Shanghai Composite Index up 17.17 points or 0.68% to 2,553.

In negative territory is Japan with the Nikkei 225 Index down only 1.70 points or 0.02% to 8,709.63 while Singapore's Straits Times Index is plunging 29.44 points or 1.56% to 1,857.81.

Analyst reports by research houses, MIMB and HwangDBS both do not see the run-up in the the local market sustaining today.

MIMB said in its morning report, "We foresee the market to continue on selling pressure for the rest of the week as the markets appears fatigue after a few days of run up recently.

"Recall that KLCI rallied for 8th day in a row recently despite the weak economic signals all around the world - which did not suggest that the global economic crisis has bottomed.

"Therefore, the recent rally can be described ‘dead cat bounce’ and at best may not sustain."

HwangDBS' report said, "Despite its late recovery yesterday, we still see limited immediate potential upside in the key KLCI, which may run into a wall of resistance at the 970 level.

"Even if the benchmark index overshoots this hurdle, it will likely be momentarily only as the market is ripe for a pullback from an overbought position."

Meanwhile, Wall Street has experienced an overnight bounce-up last night, which lifted its major equity indices by between 1.6% and 2.2% at the closing bell, in reaction to news that the financial condition of U.S. banks are not as vulnerable as previously thought.

Later today two pieces of news items are expected to be released by authorities – Consumer Price Index for March and international reserves statistics as at 15 April.

HwangDBS does not expect the news to have much market significance as local investors continue to look abroad for fresh leads.

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