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Bursa Malaysia stocks rally to a new record high

Bursa Malaysia shares rallied to a fresh record yesterday by strong investor sentiment and a growing speculation that the US may cut interest rates next week to spur its slowing economy.

The benchmark Kuala Lumpur Composite Index rose 20.1 points, or 1.5 per cent, to closed at 1,398.35.

The weakness in the US dollar was one of the few major reasons of a lot of money is flowing into Asia stock market. The ringgit strengthened to a 10-year high of 3.3480 against the US dollar.

Rising share prices around the region also boosted local sentiment, despite record high crude oil prices and the sluggish performance of US stocks overnight. Hang Seng Index rose 550.73 to 30,405.22 points, Strait Times Index closed at 3,771.55, up 64.41 points. All major regional indices were up except New Zealand and Vietnam’s.

Technical Analysis

Relative Strength Index (RSI) of 68.96 consider reached over bought area. The index also touch upper band of the Bollinger. Next week we will some correction. There are rooms for the index to jump over 1400 points as US might announce interest cut next week.

Bursa Malaysia Closed Higher

Kuala Lumpur Composite Index (KLCI)Today the Kuala Lumpur Composite Index (KLCI) closed up 18.44 points or 1.4 percent at 1,378.27. Following hopes that an interest rate cut in the US at the Fed’s policy meeting next week. Trading volume was 1.53 billion shares, valued at 1.88 billion ringgit.

Yesterday, the Malaysian Institute of Economic Research (Mier) is revising downward its forecast for the country’s gross domestic productivity (GDP) growth next year to 5.4% from 5.8%, against the Government’s targeted 6%. It is, however, maintaining GDP growth for the year at 5.7%. They expected the ringgit strengthening to RM3.35 to the US dollar at year-end and perhaps to RM3 by the end of next year.

The Mier also reported that inflation had risen to 1.9% in August from 1.4% in June, mainly due to the revision in civil service salary and rising food and commodity prices. Inflation for the year is expected to average 2.2%, compared with 3.6% last year.

Knee-jerk reaction again in Bursa Malaysia

Today almost all regional stock markets including Bursa Malaysia affected by the big fall in Wall Street (2.64% last Friday).  At the same time oil price also jump to the highest point at more than US90 per barrel. The US sub prime mortgage issue also is the major concerned among the investors. Too many bad news. The short term of the stock market movement remain bearish.

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