WEEK ENDED 4 JULY’08WEEKLY HIGHLIGHTS
• The KLCI fell to a 16-month low of 1,119.9 points on Friday as sentiment was weighed down by declines in regional markets. The index closed at 1,134.1 points to register a loss of 4.7% for the week.
• Regional markets continued to consolidate as oil prices touched a record high of US$145.29/brl on Thursday.
• The local market is expected to continue to take its cue from regionalmarkets as investors monitor the outlook for economic growth, oil prices, inflation and regional interest rates.
The KLCI eased in tandem with declines in regional markets and touched a 16-month low of 1,119.9 points on Friday.However, buying support of selected index stocks helped the KLCI to close at 1,134.1 points to register a loss of 4.7% for the week.Average daily trading volume was unchanged at 0.4bil units while daily turnover in value terms increased toRM1.1bil from RM1.0bil in the previous week.
Regional markets continued to consolidate as oil prices touched a record high of US$145.29/brl on Thursday. TheSouth Korea market fell by 6.3% as the inflation rate rose to a 10-year high of 5.5% in June. The Hang Seng ChinaEnterprises Index fell by 5% on concerns over higher oil prices.
On Wall Street, share prices moved in a trading range as investors remained cautious about the impact of rising oilprices on the economy, which saw the sixth consecutive month of job losses in June. The Dow eased by 0.5% to 11,289 points while the Nasdaq fell by 3% to 2,245 points over the week.The U.S. labour market remained weak as new non-farm job losses rose to 62,000 jobs lost in June compared to 49,000 jobs lost in May due to a decline in employment in the manufacturing and construction sectors. The U.S. Institute of Supply Management’s Purchasing Managers Index rose to 50.2 in June from 49.6 in May on the back of a rebound in production.Crude oil prices rose to a record high of US$145.29/brl on 3rd July 2008 to register a weekly gain of 3.6% due to asharp decline in U.S. oil inventories.
Led by higher fuel and food prices, inflationary pressures increased throughout the region with monthly inflation rates in June rising to 11% for Indonesia (10.4% in May), 11.4% for Philippines (9.5% in May), 8.9% forThailand (7.6% in May) and 5.5% for South Korea (4.9% in May).On the local front, Malaysia’s export growth rose to a 4-year high of 22% in May from 20.9% in April on the back of higher exports of commodities. Meanwhile, import growth was sustained at 7.9% over the same period. In terms of destination, export growth to China and Hong Kong surged to 71.0% and 67.9% respectively in May from 57.7% and 34.1% respectively in April on the back of higher demand for palm oil, chemicaland electrical & electronic products. As export growth outpaced import growth, the cumulative trade balance for the first five months of 2008 rose by 56.9% to RM54.7 billion compared to the sameperiod last year.
The Ringgit depreciated by 0.2% against the U.S. dollar to close at RM3.267 on 4th July 2008 on concerns over rising inflationary pressures. On a year-to-datebasis, the Ringgit registered a gain of 1.2% against the greenback.Looking ahead, the local market will continue to take its cue from regional markets as investors monitor the outlook for economic growth, oil prices, inflation and regional interest rates.At the KLCI’s closing level of 1,134.1 points on 4th July 2008, the local stock market is valued at a P/E of 14.4x on 2008 earnings, which is at a 14.6% discount to its 8-year average of 16.9x.The market is also supported by an attractive gross dividend yield of 4.4% which is comparable to the Ringgit fixed deposit rates for tenures of less than one year.
It is now the best time for you to invest in stock market or unit trust (dollar cost averaging) click here to download the powerpoint presentation.
but what is Dollar Cost Averaging? tomorrow we'll look deeper on the matter.