Stocks on Bursa Malaysia, especially blue chips are expected to hold on to their gains on Wednesday, Sept 15 after the latest US data showed the economic recovery, while slow, was proceeding
But the massive gains – with the FBM KLCI up 36.66 points – over the past two days could prompt some profit taking ahead of the holidays on Thursday, Sept 16 for Malaysia Day.
Year-to-date, the benchmark index is up 15.84% and making it the fourth best performing Asian market so far this year after the Philippines, Jakarta and Thailand.
On Wall Street, US stocks were little changed on Tuesday. The Dow Jones industrial average dropped 17.64 points, or 0.17 percent, to 10,526.49. The Standard & Poor's 500 Index shed 0.80 points, or 0.07 percent, to 1,121.10. The Nasdaq Composite Index gained 4.06 points, or 0.18 percent, to 2,289.77.
Stocks to watch on Wednesday include JERNEH ASIA BHD [], Paramount Corp Bhd, Genting Malaysia Bhd, GENTING BHD [] and GAMUDA BHD []. The strengthening ringgit could also see companies with foreign borrowings benefit, including Tenaga Nasional Bhd.
The Edge FinancialDaily reports that Jerneh Asia Bhd is set to become an even more cash-rich company, as it may pocket RM523.2 million cash from the proposed disposal of 80% stake in its insurance arm Jerneh Insurance Bhd (JIB) to ACE INA International Holdings.
Paramount disposed of its 20% stake in Jerneh Insurance also to ACE INA. Jerneh Asia and Paramount resume trading on Wednesday.
Gamuda Bhd will replace Tanjong plc on the 30-stock FBM KLCI on Sept 20. Ga,uda would be deleted from the FTSE Bursa Malaysia Mid 70 Index and replaced by TA Global Bhd.
Also on the investors’ radar screen would be Genting Malaysia and Genting whose share prices surged on Tuesday following the positive developments in Genting New York LLC’s (Genting NY) bid.
Genting Malaysia’s unit, Genting NY has cleared the final hurdle to develop and operate a video lottery facility at the Aqueduct Racetrack in New York following the green light given by the New York State Comptroller.
Stocks to watch also include companies which will benefit from the stronger ringgit. A foreign research house had revised down its US$/RM three- and 12-month forecasts to RM3.10 (from RM3.15) and RM2.98 (from RM3.05), respectively.
The research house said foreign participation in the Malaysian stock market has seen three consecutive net inflow of foreign funds – up RM3.0 billion in August, RM2.3 billion in July and RM1.8 billion in June. The key driver is the strengthening ringgit.
Potential beneficiaries are those with US$ cost and ringgit revenue such as airlines (AirAsia and MAS), Tenaga and Tan Chong.The potential losers include exporters such as PLANTATION [] companies (KLK, Sime, Genting Plantations, and to a lesser extent IOI Corp) and timber companies (Ta Ann).
“We reiterate our OUTPERFORM rating on AirAsia and Tenaga, and our UNDERWEIGHT on palm oil and timber sectors,” said the research house.
Written by Joseph Chin
The Edge Malaysia
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