New record for Malaysian stocks

Bursa Strong broad-based buying pushes local market to record close

PETALING JAYA: Buying momentum continues in the local stock market with the benchmark FBM KLCI closing at a record high as political uncertainty eases post-general election.

The benchmark index breached the immediate resistance of 1,785 with foreign funds adding support to the market through extended buying.

The broader market was up with gainers outpacing losers 889 to 141 or a six-to-one ratio while 166 other counters were traded unchanged. The FBM KLCI closed up 0.88% or 15.52 points to 1,787.90. The index had risen to an intraday high of 1,788.03.

Volume stood at 2.86 billion shares with a face value of RM3.04bil. Banking stocks were among counters that saw buying interest with CIMB among the top gainers. The counter gained 17 sen to RM8.46, Maybank rose 14 sen to RM10.22 and Public Bank added 12 sen to RM16.72. Meanwhile, heavyweights such as DiGi gained 11 sen to RM4.80 and Tenaga Nasional rose 19 sen to RM8.45.

MIDF Investment Bank Bhd research head Zulkifli Hamzah said in a report that foreign investors had given a resounding “thumbs-up” for the outcome of the general election by buying an unpredecented RM3.1bil net of Malaysian equity in the open market, marking a record 22 straight weeks of net foreign buying.

“So far this year, foreign investors have bought RM17.4bil net of Malaysian equity in the open market compared with RM13.7bil in 2012. Foreign participation rate surged 52% to RM1.86bil, the highest ever, and prior to last week, participation rate averaged only RM979mil per week in 2013,” he said.

While foreign investors have been snapping up Malaysian equities, local investors took the opportunity to offload their positions significantly.

“Local retail investors sold RM727mil last week of heightened participation rate of RM1.5bil. So far this year, local retailers have already sold net RM5.9bil, surpassing the RM4.2bil recorded for the entire 2012,” he noted.

Zulkifli said selling by local funds also hit unprecedented levels last week, with net sale by local funds hitting RM2.39bil, also at an unpredecented participation rate of RM3.57bil.

“So far in 2013, local funds have reduced their equity exposure by a massive RM11.5bil net, compared with RM9.5bil for the entire 2012.”

The FBM KLCI topped the charts with a historic high of 1,826.22, up 131.45 points, or 7.76% before ending last Monday up a hefty 57.25 points, or 3.38% to 1,752.02 points.

The index gained a total of 77.61 points last week, or 4.6% to 1,772.38, versus 1,694.77 on May 3.

“On our end, we are actually not that hot on the market, as we think valuations are quite fair at this point in time. We think the oil and gas sector and consumer sector would hold up fairly well compared to the other sectors,” Fortress Capital Asset Management (M) Sdn Bhd chief executive officer Thomas Yong said.

He said stocks are quite fairly priced now according to their topline projections but there might still be the possibility of the goods and services tax being implemented, which might impact projections.

“Malaysian equities have been on a low beta over the past few years with a defensive stance, and it is always positive when external funds are buying in,” he said. - The Star Online