BURSA MALAYSIA: Share Prices Expected To Undergo Correction With Upside Bias

KUALA LUMPUR, May 22 (Bernama) -- Share prices on Bursa Malaysia are expected to undergo further correction with an upside bias next week, amid uncertainties over economic recovery in the United States and the euro-zone financial crisis, dealers said.

"The outlook is uncertain and we are likely to see another round of correction," said head of Inter-Pacific Research, Anthony Dass.

"Major concern is the European crisis as investors remain cautious that the pace of economic recovery in the region will slow down as governments combat a debt crisis with spending cuts," he said.

In addition to Europe, the higher US jobless data and weaker-than-expected indices of US leading economic indicators, which gauged the economy's future growth, had created a jittery scenario in the local market, Anthony said.

"Based on the current weaknesses, the trend will continue for a while but I believe that the market will rebound back later," he said.

According to the dealers, the local bourse may see a mild technical rebound next week after experiencing six successive days of being in negative territory.

The benchmark FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBM KLCI), ended the week's sharply lower, hitting an almost five-month low, in tandem with the weaknesses in the regional bourses, which saw the MSCI Asia Pacific Index fell to a nine-month low on Friday.

"While investors' sentiment on the local front will be dictated by the external trend, any swing in the local bourse is expected to be less choppy than on its regional peers," Anthony said, adding that local market fundamentals were still positive and would help to cap further losses.

Bargain-hunting activities, particularly on small- and mid-cap stocks, would also continue to support the market, he said.

Any latest report regarding proposed merger and acquisition exercises could also provide further direction to the bourse, the dealers said.

Meanwhile, EON Capital Bhd (EONCap) board of directors has agreed to table the proposed acquisition by Hong Leong Bank Bhd (HLBank) on its assets and liabilities for shareholders' consideration at an extraordinary general meeting to be convened in due course.

EONCap said the HLBank's RM5.06 billion offer was in the best interest of the company.

It came to the conclusion after considering the opinion letter from Credit Suisse and advice from its international financial adviser Goldman Sachs (Singapore) Pte Ltd and all relevant aspects of the proposed disposal.

For next week, the KLCI is expected to see a resistance level at the 1,285 points and support at 1,200 points.

During the week, the market saw the listing of Masterskill Education Group Bhd on May 18. Stock of the country's largest operator of a non-government nursing college closed the week one sen lower at RM3.82 with 3.677 million shares transacted.

On a Friday-to-Friday basis, the benchmark FBM KLCI index went down 53.57 points to 1,285.73 from 1,339.3.

The Finance Index dropped 520.17 points to 11,590.88, the Industrial Index declined 88.07 points to 2,612.63 and the Plantation Index was 335.74 points lower at 6,089.73.

The FBM Emas Index fell 390.07 points to 8,625.67, the FBM100 Index went down 370.11 points to 8,407.18, the FBM70 dropped 447.86 points to 8,423.03 and the FBM ACE edged down 177.38 points to 3,836.73.

The weekly turnover declined slightly to 3.757 billion shares worth RM6.735 billion from 3.842 billion shares worth RM5.712 billion last week.

Volume on the Main Market, however, rose to 3.145 billion shares worth RM6.605 billion from 2.987 billion shares valued at RM5.505 billion previously.

The ACE Market volume went down to 338.709 million shares worth RM45.906 million from 415.975 million shares worth RM76.978 million last week.

Call warrants fell to 214.356 million units worth RM31.875 million from 371.157 million units valued at RM61.021 million previously