Malaysian shares may have put the worst behind them and the bourse could rally in the new year, analysts said on Friday as trading got off to a positive start. The first session of the year saw prices rise 2.0 percent as blue chip stocks were snapped up on Friday.
Traders said local funds were continuing to accumulate stocks despite concerns the market could see a bout of selling in the new year after share prices rose more than 3.0 percent in December on year-end window dressing. "I hope the worst is behind us in 2009," said Yeah Kim Leng, chief economist at ratings agency RAM Holdings. "The market will be volatile but the worst for the stock market is slightly over as compared to 2008," he said in a forecast for the week ahead.
Yeah said the bourse had been bolstered by a 2.0 billion dollar stimulus package unveiled by the government, aimed at combating the effects of the global slowdown. "Its implementation results remain to be seen, but at least we are hopeful that it will avert a prolonged downturn," he said.
For the week to January 2, the Kuala Lumpur Composite Index gained 17.99 points or 2.1 percent to 894.39 points. The run-up to the Lunar New Year holiday, which this year falls on January 26, has traditionally seen a rally on the Malaysian bourse. But some analysts are sceptical it will emerge this year. Aseambankers chief chartist Lee Cheng Hooi said the rally, if it materialises, will be "fraught with long-term selling at the upper end of the (index's) range."