PETALING JAYA: The first half year was a tough one for stock investors and the bad news is that most people believe it won't get easier any time soon.
The Dow Jones Industrial Index - probably the most watched stock index in the world - dropped 106.91 points last Friday and at 11,346.7 points was 19.9% lower from its peak eight months ago.
A 20% decline is widely considered by analysts as the start of a so-called bear market.
Most Asian stock markets, at least the major ones, have already been in deep bear market territory for the past couple of months.
From Japan to India, stock markets across the region have had their worst six months in a long time coming off four years of almost uninterrupted gains.
In Vietnam the main index had crashed 56% year-to-date, while in China the two stock exchanges in Shanghai and Shenzhen slumped at least 45% during the same period.
Analysts said as long as crude oil price keeps heading north, worries over rising inflation and decelerating growth would continue to keep a lid on stock prices worldwide.
Crude oil futures traded in New York, the global benchmark for oil price, surged above US$143 per barrel for the first time yesterday to extend gains to 48.8% year-to-date.
Malaysia, a net oil and gas exporting country, was not spared from the global sell-off on equities.
The KL Composite Index (KLCI) slipped 3.97 points on the last trading day of June to close at 1,186.57 - down 22.5% from a record 1,524.69 points achieved on Jan 14.
“We are still sticking to our bearish bias as the market is at great risk of re-testing the 1,157.47-point level,'' OSK Investment said in its technical outlook for the KLCI this week.
The level cited by OSK is the KLCI's lowest so far this year. The benchmark sank 123 points in one of its biggest single-day decline in history on March 10 after Barisan Nasional saw its worst-ever performance in a general election.
The fragile market sentiment was battered by a steep 41% increase in petrol price sold at local pumps to RM2.70 on June 5 and the decision to allow Tenaga Nasional Bhd to raise electricity tariff for a second time in two years effective today.
Economists had forecast that the consumer price index (CPI) would probably be at 5% in June and remain high for the rest of the year.
“On the whole, the confluence of domestic and external concerns will likely keep investors on the sidelines and risk appetite for equities subdued,'' RHB Research Institute said in its strategy report yesterday.
The firm also downgraded its year-end target for the KLCI to 1,128 points.
Despite the gloom during the past six months, there were still winners in the market. Losing stocks, however, overwhelmed risers by a wide margin.
Steel manufacturers were the top performers, led by Southern Steel Bhd which was up 72% to RM3.10 as at end-June, followed by Ann Joo Resources Bhd, up 43% to RM3.82; and Lion Industries Bhd, up 21% to M2.61.
Among palm oil companies, Kulim (M) Bhd gained 22% to RM9.70 as crude palm oil futures contract traded on Bursa Derivatives jumped 18% during the period.
However, top planter IOI Corp Bhd eased 4% to RM7.45, while Kuala Lumpur Kepong Bhd was almost flat at RM17.60.
Meanwhile, the drop in trading volume by half from an average of about RM2bil a day in the earlier part of the year to below RM1bil in recent weeks contributed to Bursa Malaysia Bhd's dismal share price performance.
Shares in the exchange operator closed at RM7.45 yesterday, down 48% year-to-date.
More than half of the top 30 largest stocks on Bursa - accounting for nearly 70% the total market capitalisation - posted double-digit losses for the six months under review.
0 comments:
Post a Comment