Tuesday, November 14, 2006

KLCI hit another new multi-year high.

After a mild bout of profit-taking activities on Nov 13, the bulls returned with a vengeance on Nov 14. Trading volume expanded above the one billion shares mark and the KLCI hit another new multi-year high.

The positive sentiment was also partly helped by strong performances from most regional markets, plus a sharp overnight drop in crude oil prices and the strengthening ringgit.

The KLCI's ability to hold well above the 1,000-point level and fully absorb profit-taking activities has drawn fresh investor interest. While intermittent profit-taking activities may be expected, the market's underlying sentiment appears to remain fairly positive in the near term.

Investor interest appears to be broadening out, which is a positive development. Earlier gains were mostly concentrated within a small number of key blue chips and plantation stocks.

Investors are now also re-rating stocks in the construction and infrastructure sectors, particularly those seen as beneficiaries of increased infrastructure spending under the Ninth Malaysia Plan, or associated with the Second Penang Bridge and the Iskandar Development Region in South Johor.

The KLCI was in positive territory throughout the day, with the index adding on more gains as the day progressed. The benchmark index ended right at its intra-day high, up 10.3 points to 1,030.1. Advancing stocks beat declining ones by a 2.5-to-1 ratio on high volume of 1.12 billion shares.

Trading was dominated mostly by penny or construction and infrastructure-related stocks, including UEM Builders, PMI, Gamuda warrants, MRCB and Tebrau. The day's top gainers were mostly blue chips, led by BAT, Tanjong plc, Guinness, Batu Kawan and Tenaga. Losers include Negara Properties, Resorts World and DiGi.


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