Malaysian Stocks May Trade Higher

(RTTNews) - The Malaysian stock market has finished higher in two of the last three sessions after enduring a six-day losing streak that cost the market more than 60 points or 5 percent. Analysts say that the Kuala Lumpur Composite Index could add modestly to those gains on Monday, although weakness among the commodities could cap the gains.

The global forecast for Monday is broadly positive, thanks to a sharp decline in the price of crude oil. Good news out of the U.S. financial sector also helped to allay concerns about the health of the world's largest economy, which was enough to send Wall Street higher. Also, many of the Asian markets are embroiled in lengthy losing streak, which may make share pries very interesting to the bargain hunters.

The KLCI finished sharply higher on Friday, boosted by bargain hunting after the lengthy losing streak. Heavy buying among the plantation sector was the main catalyst for the gain, while the industrials and financials also were significantly higher.

For the day, the index added 14.17 points or 1.32 percent to close at 1,085.60 after trading between 1,074.93 and 1,087.05. Volume was 314.441 million shares worth 662.757 million ringgit. There were 333 gainers and 194 decliners, with 225 stocks remaining unchanged.

Among the actives, Maybank, IOI Corp, Sime Darby, Kuala Lumpur Kepong, Batu Kawan and MISC-01. Public Bank finished flat, and PetroCH-C2, Mulphal-WA, Complete Logistic, Kimble Corp and Tenaga all finished lower.

Wall Street offers a sharply positive lead as stocks turned in a standout performance on Friday, after a sharp drop in oil prices prompted investors to look for bargains. Strength in the financial sector also contributed to the buying interest on Wall Street.

Investors were encouraged when oil prices pulled back sharply during the day, more than offsetting the price increase in the previous session. The pullback by the price of oil was partly due to a rebound in the value of the U.S. dollar. After ending Thursday's trading up $5.62 at $121.18 a barrel, crude for October delivery closed down $6.59 at $114.59 a barrel.

Meanwhile, state-run Korea Development Bank is considering the acquisition of Lehman Brothers (LEH | Quote | Chart | News | PowerRating), according to various reports on Friday. Korea Development Bank, or KDB, reportedly said it is open to mergers or acquisitions of both domestic and foreign companies to cover up its weak areas as the Korean government intends to privatize the company by 2012.

Also, Federal Reserve Chairman Ben Bernanke spoke at the Federal Reserve Bank of Kansas City's Annual Economic Symposium in Jackson Hole, Wyoming earlier in the day, calling the current policy and economic environment "one of the most challenging" in recent memory. "Although we have seen improved functioning in some markets, the financial storm that reached gale force some weeks before our last meeting here in Jackson Hole has not yet subsided, and its effects on the broader economy are becoming apparent in the form of softening economic activity and rising unemployment," Bernanke said.

The major averages saw notable gains throughout the session, closing just below their intraday highs. The Dow closed up 197.85 points or 1.7 percent at 11,628.06, the Nasdaq closed up 34.33 points or 1.4 percent at 2,414.71 and the S&P 500 closed up 14.47 points or 1.1 percent at 1,292.19. For the week, The Nasdaq was down 1.5 percent, while the Dow and the S&P 500 posted weekly losses of 0.3 percent and 0.5 percent, respectively.

In economic news, the Malaysian central bank will release its interest rate decision at the conclusion of its monetary policy meeting on Monday. Analysts are split on the rate decision, with half expecting the bank to keep rates on hold a 3.50 percent, while the rest are looking for an increase of 25 basis points to 3.75 percent.

That comes after Malaysia's Department of Statistics on Friday announced that the country's consumer price index increased 8.5 percent year-over-year in July, after rising 7.7 percent in June. Economists were looking for the CPI to climb 7.8 percent. On a monthly basis, the CPI climbed 1.1 percent in July, compared to 3.9 percent recorded in the prior month.

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