Malaysian share prices are expected to rally on the back of an expansionary 2009 budget aimed at boosting the government's support and stimulating the economy.
"The government has put together a budget which is aimed at reducing the burden of rising inflation on lower income groups, leaving the man on the street with more money in his pocket," a research head at a bank-backed brokerage told Dow Jones Newswires.
"This is likely to be supportive of domestic consumption growth," he said. Among measures introduced in the budget handed down Friday, the government has reduced income tax for medium and high-income earners by one percentage point and given civil servants a one-month salary bonus.
The bourse is expected to gain ground in the week ahead as investors digest the budget measures, with the main index tipped to trade in a band of 1,100 and 1,150, as investors digest the benefits of this budget, the dealer added. Malaysian share prices were depressed in the previous week, after opposition leader Anwar Ibrahim scored a landslide victory in a by-election that returned him to parliament after a decade-long absence. Anwar has promised to topple the government within weeks, deterring foreign investors and rattling the bourse.
For the week to August 29, the composite index rose 14.9 points or 1.4 percent to 1,100.50. Daily average volume was at 351.3 million shares valued at 730.8 million ringgit (216 million dollars), compared with 330.19 million shares valued at 672.63 million ringgit last week.