M'sian stock market still robust

FBM KLCI continues to show strength despite an uncertain outlook

[You must be registered and logged in to see this image.] THE benchmark FBM KLCI
closed 0.77% or 12.25 points higher at 1,594.98 for the second day of
positive close in tandem with Asean peers' closings while major bourses
in Hong Kong, Shanghai and Tokyo fell.
This followed the tepid response on Monday to the pro-bailout parties' win in the Greek elections from US and European markets.
The
market was in range-bound trading last week alternating between
bargain-hunting together with profit-taking activity mirroring market
movements abroad as investors looked for fresh catalysts.
From the close, defensive stocks appear to be on investors' radar screens, with consumer-related counters supporting the market.
British American Tobacco, Nestle, AEON Credit, F&N, Dutch Lady and Panasonic were among the gainers.
The
local equities front has long been known as a contrarian market, rising
when markets abroad fell and moving the other way when markets abroad
rose.

[You must be registered and logged in to see this image.] Ng:
‘If global growth recovers and there is more clarity in the eurozone,
then the local bourse may start to see downward pressure.’ Hong Leong Asset Management Bhd chief executive officer and executive director Geoffrey Ng pointed out that the local bourse continued to play its traditional defensive role.
“At
times like this, it has always performed better than higher beta
markets (riskier and more volatile markets) but if global growth
recovers and there is more clarity in the eurozone, then the local
bourse may start to see downward pressure,” he told StarBiz.
Ng
said there was also quite a bit of interest in Malaysian Government
Securities as investors chased higher yields, diversified out of
Australian sovereign bonds (deemed riskier since Australia exports much
of its minerals to China, now experiencing a slowdown) and remained
confident of Malaysia's growth prospects.
“These factors have
helped support local equities and bonds,” he said, adding that the
relatively quiet markets in Hong Kong and Singapore had also elevated
the local bourse's standing among investors.
Aberdeen Asset Management Sdn Bhd managing director Gerald Ambrose
said strong consumer demand supported by retail sales, still
commendable passenger car sales (despite supply-chain disruptions and
stricter higher-purchase rules) and banking statistics showing
respectable loans growth continue to give the market a boost.
However,
he said all these factors were already reflected in the market price.
“The FBM KLCI has outperformed neighbours with the exception of the
Philippines since the beginning of May,” Ambrose said.
Observers
have noted before that Malaysia's contrarian market was largely the
work of local funds such as the Employees Provident Fund (EPF), Permodalan Nasional Bhd and other government-linked investment funds propping the market.
This
time around, there could be added urgency as analysts noted that local
funds would continue to support the market in anticipation of several
large government-linked initial public offerings (IPOs) as well as the
run-up to the expected 13th general election.
“Malaysians have the tendency to expect that IPOs can only go up but sometimes they don't,” Ambrose said.
Nevertheless,
both Ng and Ambrose believe that the upcoming IPOs of Felda Global and
IHH were well-supported not only by government-linked funds but also
private cornerstone investors.
“There's also the perception that these IPOs should do very well because they are linked to the Government,” Ng said.
Furthermore,
observers believe that the Greek elections have not provided any
clarity to the euro-zone sovereign debt crisis with a number of
analysts expecting Greece to exit the 17-member currency union by
year's end or over the next two years.
How this would impact the
local bourse continues to be debatable as sentiments among investors
continue to be finely balanced between optimists and pessimists.
“I don't know how long this support will last but it's rather nice and healthy here with lots of liquidity,” Ambrose said.