Tuesday, July 12, 2011

FBM KLCI Touched All-Time High of 1,596 Points, 3 July – 9 July 2011 Review

Equity
The market continued to rally and reached another new all-time high at 1,596 points last week, which is just 4 points below 1,600 points. The upward momentum was driven by key index linked stocks which saw strong buying towards market close almost every trading day. For the week, the FBM KLCI rose 12 points or 0.7%. However, the key benchmark index underperformed the region as the MSCI Asia ex-Japan rose 2.6%. Average daily trading value on Bursa Malaysia rose 3% to RM1.78 billion, which is 11% above the three-month average of RM1.61 billion.

Equity Market Outlook
We believe the market may experience some pullback this week as the European debt crisis resurface again. Investors are still not convinced that the Greek resolution is permanent. Furthermore, the Bersih rally on Saturday could dampen investors’ sentiment. In term of sector picks, we still like the construction sector. Last Friday, the Prime Minister launched the RM50 billion MRT project, which was renamed My Rapid Transit. This project should garner greater interest in construction stocks as up to RM13 billion worth of contracts for the elevated portion of MRT will be awarded in 2H11. Tenders will be called from August. Awards will be spread out in 2H11 and into early 2012.

Equity Market Strategy
Stock picking is still our strategy with preference for liquid fundamental stocks on weakness.



Source: ING Funds Berhad

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