More positive views on the global economy
THE technical analyses may indicate an upside bias to trading on Bursa Malaysia this week, but it will take a pretty powerful catalyst to firmly boost the market above 1,300 points. Most observers do not expect such a thing to emerge anytime soon.
Although the Kuala Lumpur Composite Index closed last week at 1,300.67 points, it is likely that there will not be sufficient interest among investors to generate more than range-bound activity.
“Of late, there have been some positive views on the global economy and the equity markets from various sources, and this has helped in regaining investor confidence. However, it's still a long way from a full recovery,” says a fund manager.
“Besides, the flow of negative news is still there, and unfortunately, bad news tends to get more attention than good news when people are in a bearish mood.” For example, last Thursday, Standard & Poor's said it believed that the credit crisis in the US was bottoming out.
S&P Equity Research vice-president and director of research, Asia, Lorraine Tan, said at a briefing, “Obviously many companies are paying higher rates for their loans but they are finding it easier to raise funding than say, eight months ago.” Yet, on the same day, International Monetary Fund managing director Dominique Strauss-Kahn warned that tight global credit conditions may go on even though there were “good reasons to believe the worst news (is) behind us.”
He said the US economy would only pick up once the housing market is stabilised. “Even if we argue that the biggest part of the financial crisis is behind us, what is important is that the economic consequences of this crisis are in front of us,” he said.
That means that US economic data will continue to be a huge factor in the world's equities markets. On Friday, investors will study the existing-home-sales figures for April to figure out the direction of the US economy.
Other US economic statistics that will come out next week include the April Conference Board leading economic indicators (on Monday) and the April Producer Price Index (on Tuesday). The index measures the average change over time in the selling prices received by domestic producers for their output.
On the home front, observers do not expect any market-moving developments this week. We are approaching the tail end of the reporting season for the first-quarter results, and so far, there have not been any major surprises.
Says a research head, “Realistically, the first-quarter numbers are not much to go on. You can't make a reasonable assessment based on this.”
Oil and gas and plantation stocks will probably be the favourites as a result of the soaring oil prices. At the same time, the stock market sentiments will be muted as investors remain cautious in anticipation of major political developments.
The Star
By ERROL OH
THE technical analyses may indicate an upside bias to trading on Bursa Malaysia this week, but it will take a pretty powerful catalyst to firmly boost the market above 1,300 points. Most observers do not expect such a thing to emerge anytime soon.
Although the Kuala Lumpur Composite Index closed last week at 1,300.67 points, it is likely that there will not be sufficient interest among investors to generate more than range-bound activity.
“Of late, there have been some positive views on the global economy and the equity markets from various sources, and this has helped in regaining investor confidence. However, it's still a long way from a full recovery,” says a fund manager.
“Besides, the flow of negative news is still there, and unfortunately, bad news tends to get more attention than good news when people are in a bearish mood.” For example, last Thursday, Standard & Poor's said it believed that the credit crisis in the US was bottoming out.
S&P Equity Research vice-president and director of research, Asia, Lorraine Tan, said at a briefing, “Obviously many companies are paying higher rates for their loans but they are finding it easier to raise funding than say, eight months ago.” Yet, on the same day, International Monetary Fund managing director Dominique Strauss-Kahn warned that tight global credit conditions may go on even though there were “good reasons to believe the worst news (is) behind us.”
He said the US economy would only pick up once the housing market is stabilised. “Even if we argue that the biggest part of the financial crisis is behind us, what is important is that the economic consequences of this crisis are in front of us,” he said.
That means that US economic data will continue to be a huge factor in the world's equities markets. On Friday, investors will study the existing-home-sales figures for April to figure out the direction of the US economy.
Other US economic statistics that will come out next week include the April Conference Board leading economic indicators (on Monday) and the April Producer Price Index (on Tuesday). The index measures the average change over time in the selling prices received by domestic producers for their output.
On the home front, observers do not expect any market-moving developments this week. We are approaching the tail end of the reporting season for the first-quarter results, and so far, there have not been any major surprises.
Says a research head, “Realistically, the first-quarter numbers are not much to go on. You can't make a reasonable assessment based on this.”
Oil and gas and plantation stocks will probably be the favourites as a result of the soaring oil prices. At the same time, the stock market sentiments will be muted as investors remain cautious in anticipation of major political developments.
The Star
By ERROL OH
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