Well, this will be short and sweet. Readers will be familiar that I have said that this will be a 3 steps forward, 2 steps back kind of rally. Then somebody threw something into the barbecue pit yesterday when they announced the removal of the 30% ruling for foreign companies. If I had not been that clear before, it is a substantive impetus for the KLCI. Prior to that, I was looking for a stop-start rally that could bring the KLCI to a year's high of 1,100 - but the high may only be reached towards the end of the year. Now, with the additional impetus, it has elevated Malaysian stocks into a different valuation platform. I can assure you that over the next 3 days, there will be a huge truckload of highly favourable strategy reports on Malaysian economy and Malaysian stocks. Imagine being used to a hose that has people stepping on it all the time, the water trickles in in spurts. The fresh developments is a bit like replacing that with a metal pipe. The flow on effects will be enormous. I am comfortable that the CI will surge past 1,020 within days. I have also revised the high for the CI this year from 1,100 to 1,180. Expect a premium being accorded to Malaysian stocks, compared to other emerging markets in the coming weeks and months. Cheers!
p/s photos: Kelly Lin
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