Malaysian shares ended higher on Monday, its third consecutive day of gains, led by power firm Tenaga Nasional Bhd ahead of an expected US Federal Reserve interest rate rise on Tuesday.
The market's benchmark Kuala Lumpur Composite Index hit 866.44 points, the highest in almost five months, but erased part of its gains to finish 0.66 percent up at 865.34.
Overall volume was a moderate 421 million shares worth 822 million ringgit ($216 million) as declining stocks beat gainers 364 to 347. "The majority are local funds but foreign funds are nibbling as well. Its not a broad-based rise, it's mostly selected index-linked stocks," said Heddy Humaizi Hussain, an analyst with Mayban Securities.
The stock market is likely to rise further this week ahead of the annual general assembly of the main ruling party, United Malays National Organisation (UMNO), dealers and analysts said. Small firms and penny stocks are expected to be the main focus as investors typically bet on the companies which may benefit from any state contracts with the UMNO meeting.
Shares of state-controlled KUB Malaysia Bhd, an IT firm which also holds the Malaysian franchise for A&W restaurants, were actively traded and the stock ended 2.1 percent down at 69 cents.
The stock of construction firm Malaysian Resources Corp Bhd which is controlled by the brother of Malaysia's king, was also actively traded and ended unchanged at 86.5 cents.
Among heavyweights, Tenaga rose 2.7 percent to 11.30 ringgit, phone firm Telekom Malaysia Bhd gained 0.9 percent to 11.70 ringgit while shipper Malaysia International Shipping Corp Bhd was up 0.8 percent to 12.70 ringgit.
Gains in these three stocks accounted for more than half of the key index's rise.