Selling pressure could pick up the later part of April (ext: Edge)

Investors and Malaysians at large view the new Cabinet line-up as positive, even though there are still headwinds ahead for the economy, especially from external factors.

“Fundamentally there is no impact to the economy but people are positive to the changes,” said Chris Eng, associate director as OSK Investment Research.

The market would continue to be driven by US factors, he said, adding “this is still a bear market rally and selling pressure could pick up the later part of April”.

“The global economy is still not out of the woods. In terms of recovery, Malaysia will lag behind China and the US. For this year, we see the Malaysian economy bottoming in the second quarter, staying flat towards end-2008 and a recovery in the first quarter of next year,” he said.

Of concern would be the weaker industrial production index over the first two months of this year and economists expect a recession in the first half of this year.

The market on April 10 could see some profit taking on stocks which had run up the previous day, especially ahead of the weekend and a trade-shorten week for US equities due to Good Friday.

Plantations would continue to generate strong interest, with the third month crude palm oil futures rallying to a six-month high of RM2,267,

AmResearch said it was raising its average CPO price assumption by 25% to RM2,500 per tonne for 2009 from RM2,000 tonne.

“For 2010, our average CPO price assumption is now RM2,700 per tonne against RM2,300 per tonne previously. Although CPO prices have risen 32% year-to-date, we believe that the CPO pricing upcycle would be sustained,” it said.

Aside from plantations, other counters which would see trading interest are Axiata Group, AirAsia, glove makers, LPI and K-One Technology.