Get a free trial on EXPERT STOCK SCREENER!
Trading on the global stock market was almost uneventful in the past week, following the spate of volatility of late.
Japan continues to count the death toll from the massive earthquake-tsunami while a broad array of measures are being undertaken to control radiation from the troubled nuclear plant in Fukushima. Several countries have since restricted Japanese food imports on concerns of radioactive contamination.
Nevertheless, most are upbeat that there will be no long-lasting impact on the global economy aside from some disruption to the supply chain for the next few months. Japan’s economy itself is expected to decline for one, or two quarters at most, but will enjoy a fillip once reconstruction activities start.
Indeed, the country’s increased spending on rebuilding is expected to drive growth in the region in the later part of the year and into 2012. Bargain hunting lifted the Nikkei index 3.6% higher last week as investor panic receded, although it is still well below levels before the devastating quake.
Investors appear to be taking the escalation in fighting in Libya in stride. Coalition military air strikes, carried out under the United Nations Security Council’s latest resolution, have halted the siege of forces loyal to Muammar Gaddafi on the rebel’s last stronghold in Benghazi. However, a resolution to the crisis is still elusive. Even the objective and exit strategy for the coalition forces — now assembled under Nato command — remain murky.
Meanwhile, unrest in other Middle East nations continues to simmer, keeping crude oil prices at elevated levels — despite the drop in demand from Japanese refineries affected by the earthquake. It appears unlikely that matters could be resolved in the near term, which could mean protracted high prices for oil going forward.
Crude oil futures traded on the New York Mercantile Exchange is currently hovering above US$105 (RM317) per barrel while the Brent crude on London’s ICE Futures exchange is trading near US$116 per barrel.
Investors also shrugged off the prospect of a financial bailout for Portugal, which many now view as imminent. The Portuguese prime minister resigned last week after parliament rejected his government’s austerity measures, aimed at staving off a bailout — and its accompanying stringent fiscal terms and conditions. Fitch and Standard & Poor’s downgraded the credit rating on the country’s bonds.
Market observers are taking the upbeat view that the EU has made progress on a more comprehensive crisis package over the past few months, including expanding the European Financial Stability Facility and the setting up and funding for a permanent bailout fund — the European Stability Mechanism — to replace it in 2013.
At the moment, there are hopes that the sovereign debt crisis will be contained within the peripheral economies in the eurozone — even though many believe that some sort of debt restructuring for Greece and Ireland may be inevitable.
Bellwether indices in key markets in the region all closed higher for the week. The stock markets in Singapore, Hong Kong and Taiwan were up by between 2.6% and 4.6%.
Stocks on Bursa drift sideways on uncertain outlook
On the home front, stocks on Bursa Malaysia drifted sideways throughout the week. Given the myriad of uncertainties in the external environment, it is likely that investors will remain sidelined, at least in the near term. At this point, outlook for the global stock market is unclear.
The FBM KLCI gained nearly 12 points for the week to close at 1,515.6 points last Friday. This was the second straight week of gains for the bellwether index, which is now just marginally down for the year-to-date.
Daily on-market trading volume improved last week, to an average of about 1.21 billion shares, up from the daily average of about 1.02 billion shares transacted in the previous week.
Whilst the bulk of trading was centred on lower liner stocks, there is a distinct lack of excitement and urgency as that registered at the start of the new year. Caution is translating into more selective investing decision for investors.
Portfolio review
Stocks in our model portfolio kept pace with the benchmark index last week. Total market value for our basket of 17 stocks rose 0.76% to RM535,175, compared with the FBM KLCI’s 0.78% gain.
Twelve stocks in our model portfolio ended the week in positive territory while four others closed in the red and one traded unchanged.
Some of the notable gainers for the week were Masterskill Education Group (+7.6%), 3A Resources (+4.8%) and MyEG Services (+4.1%). Meanwhile, the warrants for Masteel closed 8% higher at 60.5 sen in line with gains for the parent stock, which ended the week 1.7% higher at RM1.18. At the other end, HELP International fell 1.2% to RM2.54 while shares for Tanjung Offshore and Axiata also closed down 1.4% and 1.5%, respectively, for the week.
Including our large cash reserves, our total portfolio value was up by a lesser 0.58% to RM702,335. For prudence’s sake, our model portfolio continues to hold quite a significant amount of cash totalling RM167,160 — for which no interest is imputed. The cash accounts for roughly 24% of the current total portfolio value. We adjusted our portfolio for 3.3 sen per share dividends from Al-Aqar KPJ REIT.
Last week’s gains lifted our model portfolio’s cumulative returns since inception to 339% on our initial capital of just RM160,000. We continue to outperform the FBM KLCI, which was up by about 134.3% over the same period, by some distance.
Our total profits are very substantial at RM542,335, of which RM356,194 has already been realised from previous sales of shares. We kept our portfolio unchanged for the week.
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, March 28, 2011.
Japan continues to count the death toll from the massive earthquake-tsunami while a broad array of measures are being undertaken to control radiation from the troubled nuclear plant in Fukushima. Several countries have since restricted Japanese food imports on concerns of radioactive contamination.
Nevertheless, most are upbeat that there will be no long-lasting impact on the global economy aside from some disruption to the supply chain for the next few months. Japan’s economy itself is expected to decline for one, or two quarters at most, but will enjoy a fillip once reconstruction activities start.
Indeed, the country’s increased spending on rebuilding is expected to drive growth in the region in the later part of the year and into 2012. Bargain hunting lifted the Nikkei index 3.6% higher last week as investor panic receded, although it is still well below levels before the devastating quake.
Investors appear to be taking the escalation in fighting in Libya in stride. Coalition military air strikes, carried out under the United Nations Security Council’s latest resolution, have halted the siege of forces loyal to Muammar Gaddafi on the rebel’s last stronghold in Benghazi. However, a resolution to the crisis is still elusive. Even the objective and exit strategy for the coalition forces — now assembled under Nato command — remain murky.
Meanwhile, unrest in other Middle East nations continues to simmer, keeping crude oil prices at elevated levels — despite the drop in demand from Japanese refineries affected by the earthquake. It appears unlikely that matters could be resolved in the near term, which could mean protracted high prices for oil going forward.
Crude oil futures traded on the New York Mercantile Exchange is currently hovering above US$105 (RM317) per barrel while the Brent crude on London’s ICE Futures exchange is trading near US$116 per barrel.
Investors also shrugged off the prospect of a financial bailout for Portugal, which many now view as imminent. The Portuguese prime minister resigned last week after parliament rejected his government’s austerity measures, aimed at staving off a bailout — and its accompanying stringent fiscal terms and conditions. Fitch and Standard & Poor’s downgraded the credit rating on the country’s bonds.
Market observers are taking the upbeat view that the EU has made progress on a more comprehensive crisis package over the past few months, including expanding the European Financial Stability Facility and the setting up and funding for a permanent bailout fund — the European Stability Mechanism — to replace it in 2013.
At the moment, there are hopes that the sovereign debt crisis will be contained within the peripheral economies in the eurozone — even though many believe that some sort of debt restructuring for Greece and Ireland may be inevitable.
Bellwether indices in key markets in the region all closed higher for the week. The stock markets in Singapore, Hong Kong and Taiwan were up by between 2.6% and 4.6%.
Stocks on Bursa drift sideways on uncertain outlook
On the home front, stocks on Bursa Malaysia drifted sideways throughout the week. Given the myriad of uncertainties in the external environment, it is likely that investors will remain sidelined, at least in the near term. At this point, outlook for the global stock market is unclear.
The FBM KLCI gained nearly 12 points for the week to close at 1,515.6 points last Friday. This was the second straight week of gains for the bellwether index, which is now just marginally down for the year-to-date.
Daily on-market trading volume improved last week, to an average of about 1.21 billion shares, up from the daily average of about 1.02 billion shares transacted in the previous week.
Whilst the bulk of trading was centred on lower liner stocks, there is a distinct lack of excitement and urgency as that registered at the start of the new year. Caution is translating into more selective investing decision for investors.
Portfolio review
Stocks in our model portfolio kept pace with the benchmark index last week. Total market value for our basket of 17 stocks rose 0.76% to RM535,175, compared with the FBM KLCI’s 0.78% gain.
Twelve stocks in our model portfolio ended the week in positive territory while four others closed in the red and one traded unchanged.
Some of the notable gainers for the week were Masterskill Education Group (+7.6%), 3A Resources (+4.8%) and MyEG Services (+4.1%). Meanwhile, the warrants for Masteel closed 8% higher at 60.5 sen in line with gains for the parent stock, which ended the week 1.7% higher at RM1.18. At the other end, HELP International fell 1.2% to RM2.54 while shares for Tanjung Offshore and Axiata also closed down 1.4% and 1.5%, respectively, for the week.
Including our large cash reserves, our total portfolio value was up by a lesser 0.58% to RM702,335. For prudence’s sake, our model portfolio continues to hold quite a significant amount of cash totalling RM167,160 — for which no interest is imputed. The cash accounts for roughly 24% of the current total portfolio value. We adjusted our portfolio for 3.3 sen per share dividends from Al-Aqar KPJ REIT.
Last week’s gains lifted our model portfolio’s cumulative returns since inception to 339% on our initial capital of just RM160,000. We continue to outperform the FBM KLCI, which was up by about 134.3% over the same period, by some distance.
Our total profits are very substantial at RM542,335, of which RM356,194 has already been realised from previous sales of shares. We kept our portfolio unchanged for the week.
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, March 28, 2011.