Proton to test its resistance of RM4.40-50 tomorrow

There are many rumors or reports surrounding Proton which may account for the current sharp rally in the share price. Among them are:
- Sale of Khazanah's stake in Proton to a Malaysian businessman (Syed Mokhtar?)
- Sale of the same stake to a foreign carmaker (VW?)
- More technical tie-up between Proton & foreign carmakers

The third possibility is an on-going development & is unlikely to have any significant impact on Proton's immediate performance and as such is unlikely to account for its recent sharp share price movement. In my opinion, no carmaker will be interested in acquiring a stake in Proton given the weakness in the global car market presently as well as Khazanah's refusal to relinquish management control over Proton. So, the only likely possibility is the sale of Proton to a Malaysian businessman (whoever he maybe) and I doubt anyone can do a turnaround in Proton, strictly as a commercial enterprise. That person will hope to land the Proton stake for a song; ask for & probably get more protection against foreign competition as well as more subsidies; own & manage for a few years what looks like a profitable automaker; and sell off the stake for a profit in the next up-cycle in the car market. In the end, the Malaysian motorists & taxpayers will continue to be the losers in the whole scheme of things. A sad story, indeed.

From technical perspective, this is what we can expect from Proton the stock. We can expect the recent share price to face resistance soon at the horizontal line of RM4.40-50 & thereafter from the downtrend line & horizontal line at RM5.00. I think the latter will be a major stumbling block & would be a good level for some profit-taking.


Chart: Proton's weekly chart as at Sept 16, 2009 (Source: Quickcharts)