Stocks are expected to continue to advance on Tuesday, Sept 14, after the FBM KLCI hit its highest since January 2008 on Monday on mild foreign fund buying on key index-linked stocks that pushed total value of trade done to nearly RM2 billion.
Sentiment will continue and may spread to smaller capitalised companies after US stocks advanced to their highest levels in five weeks on Monday, taking the S&P 500 index near the top of its summer range on upbeat Chinese factory data and new global banking rules.
Reuters reported the rally sent the S&P 500 above its 200-day moving average for the first time since early August, which was seen as a bullish sign. Investors are now looking to the 1,130 level, which has not been pierced since May, but if surpassed, could signal more gains on the horizon.
The Dow Jones industrial average gained 81.36 points, or 0.78 percent, to 10,544.13. The Standard & Poor's 500 Index climbed 12.35 points, or 1.11 percent, to 1,121.90. The Nasdaq Composite Index jumped 43.23 points, or 1.93 percent, to 2,285.71.
Global regulators agreed to force banks to more than triple their top-quality capital reserves in hopes of preventing another credit crisis. But the new rules, known as "Basel III," provide transition periods that could extend to January 2019 or later -- more time than many bankers expected.
Meanwhile, Standard Chartered Global Research said in its outlook report issued on Tuesday that Singapore, Malaysia and Thailand have tolerated currency appreciation in recent months.
“Terms of trade indices indicate Thailand’s and Malaysia’s export prices remain competitive. This should give authorities confidence to allow forex appreciation to stem imported inflation,” it said.
As for the new minimum capital requirements unveiled by the Basel Committee, which focuses on core Tier 1 ratio – effectively increased to 7% -- Standard Chartered Global Research said “the impact on Asian bank capital bonds is positive, in our view, but upside could be capped.”
At Bursa Malaysia, The Edge FinancialDaily reported that while the FBM KLCI hit a more-than-two-year high Monday, the CONSTRUCTION [] sector, which is virtually unrepresented in the 30-stock benchmark index, has also recorded a strong performance on renewed optimism ahead of the tabling of Budget 2011 next month.
Stocks to watch on Tuesday include JAYA TIASA HOLDINGS BHD [], BOUSTEAD HOLDINGS BHD [], TENAGA NASIONAL BHD [], Seloga and MALAYSIAN AE MODELS HOLDINGS [] Bhd.
The Edge FinancialDaily reported Jaya Tiasa which is historically known as a timber outfit, will see its earnings mix changed significantly over the next few years riding on a fast growing contribution from its PLANTATION [] division as more and more of its oil palms reach maturity.
The Edge FinancialDaily also reported that Boustead Holdings Bhd will be allowed to reclaim an area south of the Penang Bridge as compensation for scaling down its Royal Bintang Hotel project from 12 floors to five floors as required by Unesco for declaring George Town a World Heritage Site, according to sources.
Power giant Tenaga Nasional Bhd is expected to gain from a strengthening ringgit as it would have a positive impact from its foreign currency borrowings.
The Securities Commission has revised Selgoa Holdings Bhd’s proposed corporate exercise involving the issuance of rights shares. The revised exercise would involve a renounceable rights issue of up to 49.12 million rights shares with up to 73.68 million free detachable warrants.
This would be at a proposed issue price of 25 sen per rights share, on the basis of two rights shares together with three free warrants for every five ordinary shares of 25 each held after the proposed capital restructuring.
Malaysian AE Models’ unit has secured an RM81.82 million subcontract from the UEMC-Bina Puri JV to supply the baggage handling system for the proposed new-low cost carrier terminal at the KLIA.
Written by Joseph Chin
The Edge Malaysia
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