GLOBAL stocks traded, by and large, on a firmer footing last week. Sentiment for US stocks, often the bellwether for investors worldwide, improved on the back of economic data that were supportive of its economic recovery. Most Asian markets, except for China, ended the week higher.
On Bursa Malaysia, the FBM KLCI recouped some lost ground, gaining 25 points for the week to close at 1,294.4 points. Market volume was, however, lower compared to the preceding week suggesting that more investors are moving to the sidelines in view of the recent volatility. Daily trading volume dipped to less than 666 million shares, on average, compared to the average of over 849 million shares in the previous week.
We expect investors to remain cautious in the near term. Market analysts remain divided on the impact of Europe's sovereign debt crisis and fiscal tightening on the rest of the world. Meanwhile, recent data hinting at a slowdown in China, thus far, the strongest engine of growth in the global economic recovery, remains a concern. Investors will also be keeping a close watch for signs of further strengthening in the US jobs market.
Portfolio review
Stocks in our model portfolio fared relatively well last week, although gains were smaller than that recorded by the benchmark index. Our basket of 17 stocks gained 1.22%, below the FBM KLCI's 1.98% advance. Including our large cash reserves (for which no interest is imputed), the total portfolio value was up by roughly 0.93% to RM567,170.
Our model portfolio's total value and returns continue to represent a significant achievement compared with our initial capital of just RM160,000. We started the model portfolio on March 3, 2003. Our total profits are very substantial at RM407,170. Of this amount, RM239,112 has already been realised from earlier sales, and the rest are unrealised.
Since its inception, our model portfolio has registered a hefty return of 254.5% compared with our capital of RM160,000. By comparison, the FBM KLCI just about doubled over the same period, even though it has been less representative of the broader market's performance. Plus, our portfolio holds a significant amount of non-interest yielding cash at all times for prudence's sake.
Performances from our basket of stocks were mixed last week. Nine stocks ended the week higher while seven closed in the red and one counter was unchanged. Shares for Faber (+8.7%) and Tanjung Offshore (+6.6%) and Genting Malaysia (+4.2%) were among the best performers. At the other end, Green Packet was our biggest loser for the week, its shares falling 7.1%.
We are keeping our portfolio unchanged for the moment and will monitor developments for cues on the market's outlook in the coming weeks.
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.