KUALA LUMPUR: Trading within a narrow range, the KLCI edged marginally higher on 06-05-2008 Tuesday, helped largely by selective buying of blue chips such as Tenaga, as well as steel stocks.
This was perhaps quite commendable given the backdrop of an overnight decline on Wall Street, Maybank's losses after it acquired the stake in a Pakistani bank and crude oil prices hitting fresh record highs of over US$120 (RM381.60) per barrel.
The KLCI closed the day up 1.5 points at 1,276.1 points. Market breadth was negative for the better part of the day, but evened out at the close. Volume totaled 624 million shares.
Maybank's shares fell 30 sen to a near four-year low of RM7.70 on heavy volume of 18.2 million shares after it announced the purchase of a 15% stake in Pakistan's MCB Bank for RM2.2 billion. Some view the 5.1 times price-to-book price tag as a tad high, more so considering Pakistan's political risk.
Other actively traded stocks include MEMS, which was relisted after being suspended since March, Keladi, IOI Corp, Time, TM, MRCB and Sime Darby. Major gainers include AEON, Tenaga and BAT, as well as steel stocks such as Southern Steel and Ann Joo.
The steel sector enjoyed a re-rating after Southern Steel posted a 600% increase in net profit for the quarter ended 31 March 2008, affirming the steel sector's rosy prospects. Our favourite stock, Masteel, rose 9 sen to RM1.62.
The upcoming corporate earnings season – which will last until the end of May – should provide new domestic leads for certain companies and sectors, as it has done for the steel sector.
On the external front, things are starting to look wobbly again as crude oil prices crossed new record highs of over US$120 per barrel. Wall Street is also faced with the cancellation of several high-profile takeover deals, starting with Microsoft-Yahoo. There are now concerns over Bank of America's purchase of Countrywide Financial Corp may also be derailed.
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