KL stocks to open firm on US gains

Published: 2009/05/27

MALAYSIAN shares are likely to open higher today, boosted by strong gains on Wall Street after a surprise jump in US consumer confidence elevated hopes for a quick economic rebound. Locally, Malaysia’s central bank will report on the country’s economic performance for the first quarter, followed by a likely announcement of a revised growth rate for 2009, after the close of market. The government’s current expectations were for the economy to shrink by up to one per cent this year, though private sector ecoomists say it is overly optimistic.

“The market should open higher after the performance in the US but my opinion is, where is the justification for the optimism?” said a fund manager at a local insurance firm. “The rally has pushed valuations against (earnings) growth to disproportionate levels. Some analysts even have buy recommendations on Sime Darby after its poor performance in the third quarter. How do you justify that?” he said.

Sime Darby’s net profit in the third quarter slumped 86 per cent to RM150.6 million, hit by lower realised crude palm oil prices, and analysts said conditions will remain challenging in the coming months. US stocks climbed more than 2 per cent yesterday as data showing the biggest monthly jump in consumer confidence in six years lifted hopes of an economic rebound, and a brokerage upgrade of Apple Inc drove sharp gains on the Nasdaq.

The Dow Jones Industrial Average climbed 196.17 points (2.37 per cent) to end at 8,473.49 while the tech-rich Nasdaq rose 58.42 points (3.45 per cent) to 1,750.43. The Standard & Poor’s 500 index advanced 23.33 points (2.63 per cent) to 910.33. - Reuters