On KLCI, Now What After This?

As you see, despite those bearish news, the Composite Index climbed fast. Dow Jones start wavering a couple of weeks ago and also it's cousin, Straits Times but KLCI still climbing steady. Why and whose buying?

1. THE Malaysian Institute of Economic Research (MIER) has revised downwards the country's gross domestic product (GDP) forecast this year to -2.2 per cent from 1.3 per cent earlier on the back of export slump arising from the global economic turmoil. http://ph.news.yahoo.com/afp/20090416/tbs-malaysia-economy-growth-3f3520e.html

2. In February 2009, Malaysia’s exports posted a decrease of 15.9% to RM39.6 billion and imports also fell by 27.3% to RM27.6 billion year on year. As compared with January 2009, exports registered an increase of 3.4% from RM38.3 billion while imports down by 8.4% from RM 30.2 billion. More official statistic here: ttp://www.statistics.gov.my/eng/index.php?option=com_content&view=section&id=6&Itemid=12

3. Kuala Lumpur, 26 March Malaysia’s gross domestic product (GDP) growth rate is forecasted to drop to zero per cent as the global financial crisis evolves into a deepening subregional industrial crisis in Southeast Asia, according to the United Nations’ regional arm, the Economic and Social Commission for Asia and the Pacific (ESCAP).

In my earlier post I mentioned about second coming of Valuecap.* I said, expect Valuecap to enter the market after Najib appointed as PM. That will show market confidence in Najib. Since there was issues arose, EPF could cancel the plan to give 4 billion loan to Valuecap and instead, investing in KLSE directly herself.

Yes, the recent high volume bulk from institutional are from EPF. Retail participation? Not much as you might think . At this stage, as usual, certain group (syndicates?) came in second and start pushing lower liners luring some retail players. The lower liner just started, you can jump in in order not to miss boat, but remember boat can sinks. There will always another boat.

Here's just an example how the large volume created:
IOICORP acquired and disposed by EPF:
06/04/2009 100,000 shares disposed
08/04/2009 204.400 shares disposed
13/04/2009 2,487,000 shares acquired
13/04/2009 200,000 shares disposed
14/04/2009 2,500,000 shares acquired
14/04/2009 906,000 shares disposed
15/04/2009 1,200,000 shares acquired
15/04/2209 400,000 shares disposed
16/04/2009 1,020,500 shares acquired
16/04/2209 918,500 shares disposed
16/04/2209 10,136,160 share sothers
17/04/2009 1,500,000 shares acquired
17/04/2009 1,612,900 share disposed
20/04/2009 695,000 shares acquired
20/04/2009 797,600 shares disposed
IOICORP acquired and disposed by First State Investments (Edinburg Scotland):
10/4/2009 17,612,200 shares acquired
10/4/2009 11,657,105 shares disposed

Above data from Bursa Malaysia
On the global scene, there was a hope that the global economy is recovering and the worst is over. I think it too early to tell and if everyone only realized later that it could be a false hope, it could be fatal to the stock market. UK's and Europe is still in technical recession. Right now, the global's eyes are focusing in coming US banking stress test result. Whatever the test result, it will not enough to reflects the coming economy.

On KLSE coming weeks, I will say, correction is in order:
1. My earlier KLCI target 990 pt already touched and it is a resistance level which is harder to break.**
2. EPF already pushed the index high enough and she will not keep buying at higher and higher price, there should be a correction before she start buying again.
3. Since its EPF are buying and they have the holding power, I don't think it correct drastically, yet. It could tricky, KLCI will slowdown first and corrected slowly.
4. Locally, we need the 'activities'. Let see how the stimulus package really kick in and stimulate the economy.
5. Globally, we need more financial data to agree the worst is already over and some recent financial earnings were no just a false hope.

While EPF and other institution and certain group buying and selling activities are exciting, I would be more excited if they really indicates the economy ahead because that mean we can trade stock throughout the year 2009. It will be more exciting if we can trade without 'the worst it not over yet' in our head.

Correction first target: KLCI around 940 pt.
Upside target : KLCI 1035 pt. (incase KLCI resume uptrend or after correction)
Counters: Look for Index Linked’s GLC (Government Linked Counters) and PLC (Political Link Counters). Commodities based counters easing, let them cool down first.

*Blogpost 3rd Feb 09: "I will still stick to my earlier KLCI target of 990 pt. Allow it to happen within few months period, say until end of May"
**Blogpost 27th Nov 08: "Since the second coming of Valuecap was initiated by our beloved DPM Najib, perhaps Valuecap will only be utilized after March"