1,200-point mark breached by FBM KLCI

PETALING JAYA: The local stock market’s benchmark index breached the psychologically important 1,200-point level yesterday driven largely by the global liquidity run.
At the close, the FTSE Bursa Malaysa KL Composite Index (FBM KLCI) was up 11.68 points, or 0.98%, to 1,202.07, its highest close since June last year.
“Confidence has returned somewhat,” said Areca Capital Sdn Bhd chief executive officer Danny Wong.
Investor sentiment in the region has been bolstered this week by a number of factors including the weekend decision by G20 finance ministers to keep economic stimulus efforts in place as well as a slower decline in US job losses. Stocks in emerging markets yesterday reached levels last seen before the collapse of US investment bank Lehman Brothers.

Nevertheless, analysts remain cautious on the local stock market.
“While it seems to be a bull run, the fundamentals that drive a bull market appear absent,” said Pong Teng Siew, head of research at Jupiter Securities.
The index is currently where it was at the beginning of 2007, the year of the bull run, but the current backdrop for the fundamentals that would support current valuations remains very “touchy”, according to Pong.
“In 2007, we had a great commodity market, fantastic exports and robust earnings – where are all of that now?” he asked.
Liquidity, however, may be sufficient to keep the market on an uptrend for a while but it would be difficult to peg the market’s fair value because of this, he said.
“The G20 countries said they would continue to flood the system with liquidity so the economy doesn’t tank, that’s what investors wanted to hear.