KUALA LUMPUR: After rising strongly in the last few trading days of 2011 to end the year on a barely-there gain of 0.78% last Friday, the FBM KLCI bucked the trend of its regional counterparts and ended the first trading day of 2012 17.19 points down.
This represented a drop of 1.1% from last Friday’s close of 1,530.37 points — a 21-week high. In comparison, the Singapore’s Straits Times Index ended yesterday 1.6% up, Hong Kong’s Hang Seng Index was 2.3% higher and Indonesia’s Jakarta Composite Index gained 0.9%.
Japan’s Nikkei 225 was closed for a public holiday. The stronger performance regionally was attributed to improved manufacturing data from China, according to reports.
Although the local market had started strong in morning trade, it was unable to sustain gains going into the afternoon. HwangDBS Investment Management Bhd’s head of equities Gan Eng Peng opined that given the FBM KLCI’s strong finish last week, the market was overbought.
“If you take a look at the regional markets, there was no sudden surge in buying towards the end compared to the FBM KLCI. Most of those markets behaved in a more natural manner.
“We also heard that most of the local funds were selling today, while there wasn’t much buying on the part of government-linked funds; this would explain the dip in the market,” said Gan.
OSK Research has a “sell” call on the market for the month of January stating: “We see the KLCI as overpriced and lacking fundamentals to sustain at this level.”
The risks that OSK sees in the coming weeks include a disappointing outcome from the meeting between the leaders of France and Germany over the current European crisis and the possibility of an early general election.
Banks were among the worst hit with Malayan Banking Bhd (Maybank), Public Bank Bhd and CIMB Group Holdings Bhd in the top 10 losers yesterday.
Maybank’s share price dropped to RM8.34 from last Friday’s RM8.58, Public Bank fell to RM13.16 from RM13.38, while CIMB shed 20 sen to RM7.24. As for other banks, RHB Capital Bhd dropped 2.2% from its Friday close of RM7.48 to RM7.31, Hong Leong Bank Bhd slid to RM10.76 from RM10.90 and AMMB Holdings Bhd lost 2.5% to close at RM5.80.
According to analysts, the weaker performance by banks could be due to Bank Negara Malaysia’s monthly statistics that revealed slower loan growth for the month of November. Overall loan growth moderated for the second consecutive month to 12.8% year-on-year compared with 13.1% for October and 13.8% for September, on the back of slower growth for both the household and business segments.
According to CIMB Economics Research’s report, loan growth is expected to ease between 9% and 10% for 2012, reflecting the impact of weaker growth outlook and new banking guidelines.
On the flipside, there was an uptick in plantation counters as the price of crude palm oil futures for the third month delivery rose to a six-week high of RM3,244 per tonne on the back of weather concerns.
The contract closed higher at RM3,225 yesterday compared with RM3,175 last Friday.
This article appeared in The Edge Financial Daily, January 4, 2012.
This represented a drop of 1.1% from last Friday’s close of 1,530.37 points — a 21-week high. In comparison, the Singapore’s Straits Times Index ended yesterday 1.6% up, Hong Kong’s Hang Seng Index was 2.3% higher and Indonesia’s Jakarta Composite Index gained 0.9%.
Japan’s Nikkei 225 was closed for a public holiday. The stronger performance regionally was attributed to improved manufacturing data from China, according to reports.
Although the local market had started strong in morning trade, it was unable to sustain gains going into the afternoon. HwangDBS Investment Management Bhd’s head of equities Gan Eng Peng opined that given the FBM KLCI’s strong finish last week, the market was overbought.
“If you take a look at the regional markets, there was no sudden surge in buying towards the end compared to the FBM KLCI. Most of those markets behaved in a more natural manner.
“We also heard that most of the local funds were selling today, while there wasn’t much buying on the part of government-linked funds; this would explain the dip in the market,” said Gan.
OSK Research has a “sell” call on the market for the month of January stating: “We see the KLCI as overpriced and lacking fundamentals to sustain at this level.”
The risks that OSK sees in the coming weeks include a disappointing outcome from the meeting between the leaders of France and Germany over the current European crisis and the possibility of an early general election.
Banks were among the worst hit with Malayan Banking Bhd (Maybank), Public Bank Bhd and CIMB Group Holdings Bhd in the top 10 losers yesterday.
Maybank’s share price dropped to RM8.34 from last Friday’s RM8.58, Public Bank fell to RM13.16 from RM13.38, while CIMB shed 20 sen to RM7.24. As for other banks, RHB Capital Bhd dropped 2.2% from its Friday close of RM7.48 to RM7.31, Hong Leong Bank Bhd slid to RM10.76 from RM10.90 and AMMB Holdings Bhd lost 2.5% to close at RM5.80.
According to analysts, the weaker performance by banks could be due to Bank Negara Malaysia’s monthly statistics that revealed slower loan growth for the month of November. Overall loan growth moderated for the second consecutive month to 12.8% year-on-year compared with 13.1% for October and 13.8% for September, on the back of slower growth for both the household and business segments.
According to CIMB Economics Research’s report, loan growth is expected to ease between 9% and 10% for 2012, reflecting the impact of weaker growth outlook and new banking guidelines.
On the flipside, there was an uptick in plantation counters as the price of crude palm oil futures for the third month delivery rose to a six-week high of RM3,244 per tonne on the back of weather concerns.
The contract closed higher at RM3,225 yesterday compared with RM3,175 last Friday.
This article appeared in The Edge Financial Daily, January 4, 2012.
