Tuesday, November 11, 2008

A Thumb UP For KL Composite Index And Lower Liners.

China announced a 4 trillion Yuan (USD 586 billion) fiscal stimulus plan to jump-start growth in the world’s fourth-largest economy. The funds amount to nearly a fifth of China’s 2007 Gross Domestic Product. The first 100 billion Yuan are marked for the current quarter, with the total sum to be used no later than then end of 2010.

China contributed 27% to total global economic growth last year, a share greater than any other nation. Yesterday the KL Composite Index movement was entirely based on this announcement.

This announcement also helps the world stock market to rally yesterday. No doubt the impact on Chinese economy will take a turn, will this fiscal stimulus plan work in the way of helping other region ?

I don't think so; the funds will initially go towards building low-rent housing, infrastructure in rural areas, roads, railways and airports in China. It will have a small impact in helping out the prices of the commodity and stabilize some of the construction material prices too but for sure it will have a small impact towards the crude oil prices.

KL Composite Index has been struggling to sustain above 900 points this past few trading days. No doubt the prices of some of the counter performing quite well, still any attempt to brought the share and keep it form medium to long term at these moment cannot be consider as the right timing.

What really happens to KL Composite Index now is merely a technical rebound after the recent huge sell off but still we need to monitor the performance of the world financial market reaction towards any incoming good or bad news.

Lately the way the third liners move its gear really surprised me as it catch me by surprised again when all the sudden, counters which is used to be below RM 0.20 per share were also moving up strongly - if we want to calculate in terms of percentage gains.

Nevertheless, we should give a thumb up for KL Composite Index and all the stock share prices for their ability to climb higher and higher these past few trading days. For my own record no matter how bad the KL Composite Index perform during a sharp falls, we also need to pay a bit of attention towards the lower liners as their performance during a technical rebound were tremendously in terms of percentage gains.

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