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A Month Of Ups And Downs
Malaysia Perspective | 21 April 2010

By Inter Pacific Research

The month of February turned out to be less appetising. For a start the US Dow fell below 10,000 pts on 8 Feb-10 to close at 9,908 pts, the first drop in 2010. The drop was attributed to higher unemployment of 9.7% in February compared to 8.1% in January, coupled with on the on-going fear over EU’s sovereign debt issue and brewing concern over China monetary policy, i.e. possible tightening that could slowdown global recovery. Nonetheless, the US Dow bounced back to close end- February at 10,325 pts when the US Federal Reserve chairman acknowledged the need to keep interest rates low in order to ensure strong economic recovery.

On the regional front, there was a mixed trend amongst the performance of the bourses. The average daily trading volume across the region fell by 14.4% m/m to 37.0% m/m. The contributory factors were (1) Lunar New Year festive that kept investors on the sideline; and (2) uncertainty with respect to China’s monetary policy. As a result, in the month of February the regional bourses performance varied between decline of 2.7% m/m to a gain of 3.6% m/m. The most interesting market in February was Thailand. The Thai bourse turned out to be the best performer in February, gaining by 3.6% m/m despite the political tension flared by Thaksin’s supporters.

Turning to the Malaysian market, looking at the average daily volume traded, investors appeared to be more comfortable with large market cap stocks. This was reflected by the 14.7% FBM KLCI volume traded vis-à-vis KLSE in February compared to 7.7% in January. Looking at the overall average daily volume traded in KLSE, it fell sharply by 46.4% m/m to 740.2, partly due to the absence of pre-Chinese New Year Rally as well as uncertainties on the external front.

View Full-sized Image
(Source: Bloomberg)
(Source: Bloomberg)

Looking at the index, FBM KLCI fell by 0.46% to 1,253.39 prior to CNY. But it picked up post CNY by 1.39% to close at 1,270.78 end-February, boosted by better than expected results. Highest for the month was on 28 Feb-10 at 1,277.66 pts.

(Source: Bloomberg & KLSE)
(Source: Bloomberg & KLSE)

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KLCI Index Performance (29th Jan 2010 - 25th Feb 2010)
KLCI Index Performance (29th Jan 2010 – 25th Feb 2010)

On the corporate side, there was a Management Buyout by KNM’s managing director together with other parties RM0.90, with the objective to privatize it. Meanwhile, Scomi Marine sold its 29.1% associate i.e. CH Offshore Ltd to Falcon Energy Group Ltd for RM348.7mn cash. JCY Berhad initial public offering (IPO) fell below its IPO price of RM1.60 by 8.8% to RM1.46 in view of poor market sentiment. There was also not much excitement from Genting.

Having acquired the casino license in Singapore, they launched the Resorts World in Sentosa, Singapore on 14 Feb-10. But it failed to lift Genting’s performance as fears surfaced on the potential number of visitors. The top 5 FBM KLCI performers in February were Axiata, Astro, MMC Corp, Telekom and IOI Corp, while the top 5 losers were Genting, Public Bank, YTL Corp, Genting Malaysia and YTL Power.

(Source: Bloomberg)
FBM KLCI Top % Performers and Top 5 Losers: (Source: Bloomberg)

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