Thursday, November 30, 2006

Composite Index Reality

Its 11am and the Composite index is up a significant 14 points to 1078. However, everyone knows the underlying tone is not as strong as what the index is showing. What I am saying is, the market is good and there is good undertone to it but just not as strong as what the index is throwing off.

The index will have a very good chance this few days to tests the 1,100 level because:
a) the mega merger automatically pushes up a few index component stocks and will ensure that it stays there for some time owing to the merger proposals and premium pricing, as the deal is expected to take 12 months to complete, in a way the index will have a strong support level from these group of companies.
b) the view on plantations has been positive 6 months back on biodiesel, now most believe the palm oil prices will continue to surge ahead as biodiesel plants are actually up and running and even exported, bringing forward the reality, even the recent slump in oil prices did not deter from the feasibility of biodiesel.
c) the ringgit is still and undervalued currency and the weker USD over the last few days will only prompt more international investors to plonk their money here in Asia for better stock returns and currency exposure, the strongish ringgit will be able to deter imported inflation somewhat which is another positive for investors.
d) the mega merger may be seen as the beginning of a move to drive M&A activity for GLCs and other governemnet controlled companies, and this will be a very good thing as it will force better productivity and reduce duplication and harness economies of scale, we now have NSTP/Utusan, maybe more construction firms later
e) better openess by Bank Negara on the Anz Bank stake in AMBank is a very positive move and will improve market perception a long way, if only we can redress the REITs thing by waiving NEP equity participation for foreign controlled REITs, watch the surge of funds moving in if we do that.


simon_alibaba said...

gooD!!! This is the best malaysia finance blog in the country. your view is much better than those on the EDGE. You have better edge.

take a look on TM call warrant & maybank CW if your call (mind too) on bursa klci to test 1100!

Good Dali, your blog will be a hit!

dummy said...

Your buy call on Astro-CA is just simply superb. It has appreciated about 200%!! You are the greatest.

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