Plantation and Oil Counters in Focus (ext: Edge)

Blue chips on Bursa Malaysia managed to hold on to most of their gains on May 12, despite intermittent profit taking.

However, the breadth of the market has shown some weakness over the past two days as decliners are leading advancing counters, mainly due to selling on lower liners and penny stocks which are without fresh corporate news. Volume had reduced from recent highs.

The KLCI closed 2.48 points lower at 1,023.02 on May 12. At the current level, the KLCI is trading at a price-to-earnings of 14.65 times.

Plantation stocks will continue to attract trading interest due to the firm crude palm oil prices and the onset of the dry season could impact productivity, which in turn could push prices higher. CPO futures for third month delivery rose RM65 to RM2,725 per tonne, the highest since Aug 22 last year.

The rise in crude oil price would also attract trading interest again in oil and gas-related and also support services. Oil rose to a six-month high of US$59.68 on Nymex last night on speculation an economic recovery would reduce the stockpile of fuel.

Investors would also look at overseas markets for some leads on the bottoming out of their economies.

But at Bursa Malaysia, most of the earnings have yet to be reported while Bank Negara will announce the first quarter GDP data no later than May 27.