FBM KLCI Adds To Gains

The headline index for the Bursa Malaysia, the FBM KLCI, opened stronger and stayed in positive territory throughout the day on Wednesday. However, market breadth was more ambivalent, slipping deeper into the red as the day progressed. At the close, losing stocks outpaced gaining ones by a ratio of roughly seven to five.

The benchmark index closed six points higher at 1,306.6. Some of the notable gainers were Hartalega, Axiata, Proton, Hexagon, KYM and EON Capital. At the other end, Nestle, Tanjong and Kulim were among the top losers for the day. Investor interest remained mostly on lower liner stocks, as had been the case in recent months.

Some of the most heavily traded counters for the day include Malayan United Industries, KYM Holdings, Axiata, Lion Corp, RCE Capital and KNM. About 1.34 billion shares changed hands Wednesday, slightly more than the average of about 1.26 billion shares traded in the previous two days but still below the daily average of 1.6 billion shares transacted last week. Whilst trading interest in the local bourse has held relatively firm, outlook for equities for the rest of the year remains murky. Wall Street ended sharply higher overnight. The closely watched Dow Jones Industrial Average added 116 points to close at a 15-month high. But questions remain on further upside for stocks from hereon. Companies that have released their 4Q09 earnings results have mostly exceeded expectations.

However, their share price gains have been limited suggesting that much of the improvements have been factored into prevailing valuations. For stocks to add to the already substantial gains from 2009, earnings will have to do far better in the coming months. On the other hand, Asian stocks traded mostly lower Wednesday. Sentiment was hurt by more measures by the Chinese government to tighten monetary policy in the country.

The Shanghai Composite Index fell 2.9% while the Hang Seng Index closed 1.8% lower.

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