Sentiment for global equities remained ambivalent last week. Investors continue to trade cautiously on the back of persistent uncertainties over the eurozone sovereign debt crisis. But confidence was bolstered somewhat by stronger than expected US economic data.
Even as we approach the end of the year, the market outlook going into 2012 remains clouded. Trading activities may also start to wind down towards the year-end. Thinner trading volume could exacerbate price movements. As such, we expect investors to stay on the defensive pending greater clarity and unlikely to take up any major fresh positions in the coming days.
A big part of the uncertain outlook has to do with the eurozone debt crisis. In the past few weeks, confidence in the market has been shored up by stronger than expected US economic data. Following the mid-year slowdown, the world’s largest economy appeared to have regained some positive momentum.
For instance, the last labour market report painted a better than expected picture with some 120,000 new jobs created in November while the figures for September and October also saw upward revisions. The unemployment rate fell to 8.6%, the lowest level since the onset of the global financial crisis. Last week, claims for unemployment benefits fell to a 3½-year low. Manufacturing activities are gaining some traction while retails sales for the holiday season are looking fairly upbeat.
European growth will slow in 2012, possible even dipping into recession. Aside from the ongoing financial turmoil and credit crunch, broadening of austerity measures will damp economic growth. The big question is whether the US economy can continue to strengthen if the crisis in Europe takes a turn for the worse.
Talks of a breakup of the eurozone are now cropping up more regularly in mainstream discussions. This could be the worst-case scenario and it may result in chaos in the financial world.
The most recent summit among European leaders, again, failed to present the world with any comprehensive solution. Most of the countries have agreed to a new fiscal compact, designed to address flaws for the single currency’s current framework. But details are still lacking. German Chancellor Merkel has cautioned that there will be no quick fix for the crisis, which will take years to mend. In the meantime, Italy remains very much in the eye of the storm.
Asian stock markets did finish the week on a broadly positive footing last Friday, recouping some lost ground from the preceding few days. However, relevant bellwether indices for key markets still ended the week in the red.
On the local bourse, the benchmark FBM KLCI bucked the region’s downtrend. The benchmark index ended six points higher, at 1,466.2, for the week. However, much of the gains come from select index-heavyweights that were relatively thinly traded. Performance for the broader market was decidedly more ambivalent.
Trading volume fell back slightly with less than 1.66 billion shares traded daily, on average, compared with the daily average of almost 1.92 billion shares traded in the previous week. Trading interest remains focused on lower liner stocks.
Portfolio review
Stocks in our model portfolio underperformed the benchmark index last week. Total market value for our basket of 18 stocks was up by 0.03% to RM390,420, compared with the KLCI’s 0.42% gain.
Ten stocks in our portfolio closed with gains while five ended lower and three others traded unchanged. Bumi Armada (+3.8%), CIMB (+1.6%) and MyEG Services (+2.2%) were some of the notable gainers last week. At the other end, Benalec (-3%), DiGi (-1.9%) and BSDREIT (-1.3%) were among the big losers for the week.
Including our cash holdings, for which no interest income is imputed, our total portfolio value was up by a lesser 0.02% to RM666,085. Our total profits are very substantial at RM506,085, of which RM400,948 has already been realised from previous shares sales.
Last week’s gains lifted our model portfolio’s cumulative returns since inception to 316.3% on our initial capital of just RM160,000. We continue to outperform the KLCI, which was up by about 126.7% over the same period, by some distance.
Our cash holdings remain substantial at RM275,665, accounting for 41% of our total portfolio value. The relatively high percentage is, primarily, for prudence’s sake. We remain very cautious given the uncertain outlook. We kept our portfolio unchanged.
Note that this will be our last Portfolio review for this year. InsiderAsia wishes readers Merry Christmas and Happy New Year.
Note: This report is brought to you by Asia Analytica Sdn Bhd, a licensed investment adviser. Please exercise your own judgment or seek professional advice for your specific investment needs. We are not responsible for your investment decisions. Our shareholders, directors and employees may have positions in any of the stocks mentioned.
This article appeared in The Edge Financial Daily, December 19, 2011.
Even as we approach the end of the year, the market outlook going into 2012 remains clouded. Trading activities may also start to wind down towards the year-end. Thinner trading volume could exacerbate price movements. As such, we expect investors to stay on the defensive pending greater clarity and unlikely to take up any major fresh positions in the coming days.
A big part of the uncertain outlook has to do with the eurozone debt crisis. In the past few weeks, confidence in the market has been shored up by stronger than expected US economic data. Following the mid-year slowdown, the world’s largest economy appeared to have regained some positive momentum.
For instance, the last labour market report painted a better than expected picture with some 120,000 new jobs created in November while the figures for September and October also saw upward revisions. The unemployment rate fell to 8.6%, the lowest level since the onset of the global financial crisis. Last week, claims for unemployment benefits fell to a 3½-year low. Manufacturing activities are gaining some traction while retails sales for the holiday season are looking fairly upbeat.
European growth will slow in 2012, possible even dipping into recession. Aside from the ongoing financial turmoil and credit crunch, broadening of austerity measures will damp economic growth. The big question is whether the US economy can continue to strengthen if the crisis in Europe takes a turn for the worse.
Talks of a breakup of the eurozone are now cropping up more regularly in mainstream discussions. This could be the worst-case scenario and it may result in chaos in the financial world.
The most recent summit among European leaders, again, failed to present the world with any comprehensive solution. Most of the countries have agreed to a new fiscal compact, designed to address flaws for the single currency’s current framework. But details are still lacking. German Chancellor Merkel has cautioned that there will be no quick fix for the crisis, which will take years to mend. In the meantime, Italy remains very much in the eye of the storm.
Asian stock markets did finish the week on a broadly positive footing last Friday, recouping some lost ground from the preceding few days. However, relevant bellwether indices for key markets still ended the week in the red.
On the local bourse, the benchmark FBM KLCI bucked the region’s downtrend. The benchmark index ended six points higher, at 1,466.2, for the week. However, much of the gains come from select index-heavyweights that were relatively thinly traded. Performance for the broader market was decidedly more ambivalent.
Trading volume fell back slightly with less than 1.66 billion shares traded daily, on average, compared with the daily average of almost 1.92 billion shares traded in the previous week. Trading interest remains focused on lower liner stocks.
Portfolio review
Stocks in our model portfolio underperformed the benchmark index last week. Total market value for our basket of 18 stocks was up by 0.03% to RM390,420, compared with the KLCI’s 0.42% gain.
Ten stocks in our portfolio closed with gains while five ended lower and three others traded unchanged. Bumi Armada (+3.8%), CIMB (+1.6%) and MyEG Services (+2.2%) were some of the notable gainers last week. At the other end, Benalec (-3%), DiGi (-1.9%) and BSDREIT (-1.3%) were among the big losers for the week.
Including our cash holdings, for which no interest income is imputed, our total portfolio value was up by a lesser 0.02% to RM666,085. Our total profits are very substantial at RM506,085, of which RM400,948 has already been realised from previous shares sales.
Last week’s gains lifted our model portfolio’s cumulative returns since inception to 316.3% on our initial capital of just RM160,000. We continue to outperform the KLCI, which was up by about 126.7% over the same period, by some distance.
Our cash holdings remain substantial at RM275,665, accounting for 41% of our total portfolio value. The relatively high percentage is, primarily, for prudence’s sake. We remain very cautious given the uncertain outlook. We kept our portfolio unchanged.
Note that this will be our last Portfolio review for this year. InsiderAsia wishes readers Merry Christmas and Happy New Year.
Note: This report is brought to you by Asia Analytica Sdn Bhd, a licensed investment adviser. Please exercise your own judgment or seek professional advice for your specific investment needs. We are not responsible for your investment decisions. Our shareholders, directors and employees may have positions in any of the stocks mentioned.
This article appeared in The Edge Financial Daily, December 19, 2011.
