Web Strait’s Finance

KLCI had closed higher on this Tuesday and Wednesday, rebounding after a correction on Monday. The Composite Index rose 0.7 % or 7.65 points on Wednesday to 1043.81 in heavy volume of 1.3 billion shares.

The CEO of Bursa Saham Malaysia Bhd., Yusli said that KLCI should be getting higher in these few weeks (Even there would be some profit-taking activities). This is because the foreign investors have recently returned to the market of Malaysia. From the statistics recorded, they had mainly invested in the blue-chips. Hence, those companies should continue to perform well in terms of the company’s profits, in order to strengthen their investors’ confidence and bring the KLCI to another higher stage.

On the other hand, most of the Asian stocks were closed higher on this Wednesday. Manila had rose 1.1% to a 9-year high on heavy trading, to finish at 2,855.23. Furthermore, the stocks from Tokyo, Hong Kong, Seoul, and Singapore had also risen more than 1%.

Last week, KLCI performed quite well. There were 4 out of 5 transaction days in which the daily transaction volume exceeded 1 billion. Furthermore, KLCI successfully touched 1030-point barrier on last tuesday. And hence reached the highest level ever achieved in the recent 9 years. Finally, KLCI closed at 1040.79-point on last friday, 17 Nov 2006. All in all, KLCI had increased 18.49-point or 1.81% within the whole week. The total volume of transactions for the whole week reached 5.41 billion.

Nevertheless, there were most of the market analysts expect that profit taking corrections should arise within this week. Hence, investors are advised to be more aware in investing any stock. Because technically KLCI has seriously exceeded the overbought levels. Furthermore, there is a high posibility for KLCI to drop anytime. Hence, it’s not a bad idea for those investors who chose to enter the stock market after consolidation and pullback.

Stephen S. Roach
Chief Economist and Director of Global Economic Analysis, Morgan Stanley

Chief Economist of Morgan Stanley, Stephen S. Roach said that the economic growth for China and United States would decline in year 2007. From his view, the impacts of economic declination from both countries would be worse than what expected currently in the market. As a result, the whole world’s economic growth would decline in next year. He expected that the economic growth rate for the whole world will be about 4% in year 2007.

He said that from the past 5 years, China and U.S. have contributed about 43% directly to the global economic growth and indirectly spurred on the global economic growth (I.e. from 20% to 25%). From the past 5 years, China and U.S. have contributed about 2/3 of the global economic growth.

From the statistics above, British American Tobacco still stays top of the rank with a total return of 38.48%. This indicates that the market for tobacco is still big and profitable. Even though the government has enforced many restrictions to the tobacco companies.

For the Telecommunication and Internet fields, Maxis still leading in these fields with a profit of RM1.54 billions and the total return, 23.11%. Maxis have jumped from 10th position last year to 9th in this year. While it’s competitor, Digi had made a big jump from 22nd last year to 12nd this year. The total return for Digi is about 16.31% and they gained 0.45 billions in terms of economic profits. Anyway, there is still a big gap for Digi to catch up with Maxis. On the other hand, another giant in Telecommunication field, Celcom is out of the list of Top 20.