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KLSE Market Opening Comments
Tuesday 16 May

Well, at least Iris and Patimas are allowed to trade. The announcement by both companies on sale of building and issue price are basically crap. Non event. The danger is far from over. That's because the number of shares traded must be there - Iris just went limit down as expected but almost zilch shares traded. The next session will see it dipping to about 68 sen, lets hope we see some shares trade then. If not, the next level will be about 46 sen tomorrow - the important thing is to see shares traded so that the overhang, margin, transactions and losses can be reasonably calculated. If Iris is heavily traded in the afternoon, then it is a very good sign to buy other second liners. If the trading is less than 30 million shares, better avoid the rest. For a highly speculative counter with more than a billion shares, at least 50 million-100 million shares must be allowed to trade for the "tension" to be satisfied. Hence the flurry of buying activity on KLSE this morning is largely misguided, and of high risk.

KLSE is facing an internal, localised trading event. Iris may collapse, that is no big deal... the danger is if it brings down a broking house with it, then its a big deal. That is not clear yet!!! As for foreign participation level, just looking at the palm oil stocks and some gaming stocks moving nicely, plus Telekom's good set of results.... foreign participation is still there. The main thing to monitor on foreign participation is the ringgit level. If it keeps staying strong (and it should), then funds are still in ringgit assets. If there is a sharp correction in the ringgit, its the exit of institutional foreign funds. Hence the best development would be for a firm ringgit, as if the ringgit appreciates too fast, the party will be over too soon.


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