Malaysian share prices closed firmer as investors welcomed the government's corporate tax reduction plan in the 2007 Budget, dealers said. They said the market is likely to firm further next week after investors have fully digested the contents of the 2007 Budget.
Prime Minister Abdullah Ahmad Badawi announced Friday the corporate tax will be cut in stages to 27 percent in 2007, and 26 percent in 2008 from the current 28 percent in a move to enhance competitiveness of Malaysian firms.
The Kuala Lumpur Composite Index added 2.57 points to 960.69. Losers led gainers 369 to 340, with 313 counters unchanged and 297 stocks untraded on turnover of 408.88 million shares valued at 924.29 million ringgit (264 million dollars).
At the close, the ringgit was quoted at 3.6810/6860 to the dollar.
A local brokerage dealer said strong follow-through buying in blue chips, especially from local institutional funds, are expected next week.
He added that the lower-than-expected hike in tax duties on tobacco and liquor will likely see companies like BAT Malaysia and Guinness Anchor sustaining gains.
TA Securities said in its note to clients that the stronger-than-expected second-quarter GDP growth of 5.9 percent compared with the market consensus of 5.6 percent should also boost sentiment and push selected blue chips higher.
Construction and transport-related stocks are also expected to attract further interest on hopes they will benefit from the governments multi-billion ringgit plan to solve Kuala Lumpur's chronic traffic problems, TA said.
Malaysia on Tuesday announced plans to upgrade public transport in and around the capital by building a new light rail transit line, and extending other rail networks under the 10 billion ringgit project over 4 years. Among key blue chips, Tenaga was up 0.10 ringgit at 9.25 while both Telekom and Maybank were steady at 9.10 and 11.20 respectively.