Market drifts marginally lower

Tags: Bursa Malaysia | catalysts | drift | Japan

Written by InsiderAsia
Friday, 25 September 2009 17:29

Share prices on Bursa Malaysia continued to marginally drift lower on Friday, Sept 25, extending a three-day decline for the holiday-shortened week.

Investors took their cue from an overnight fall on Wall Street and weak regional markets. Most regional bourses fell sharply at the open on Friday, but pared much of their losses later, although the Nikkei 225 index still ended 2.6% lower.

There is also increasing investor caution after recent steep gains, and many are tempted to lock in gains – or just sit on the sidelines. With many still away for the extended holidays, trading on the local bourse remained moderately low, with 688 million shares changing hands.

Still, the extent of declines here was marginal. The FBM KLCI fell just 0.7 of a point to 1,217.4. Market breadth was mixed with an almost equal number of advancing and declining stocks at the close.

Actively traded stocks include KNM, Oilcorp, DutaLand, Salcon, Insas and Notion VTec. Major gainers include NSTP, Utusan and Tracoma. Losers include BAT, IJM and Tanjong plc.

Globally, there has been a lack of fresh catalysts to lead markets higher, after the spectacular gains since mid-March 2009. With stock prices already factoring in a strong recovery ahead, investors will need new data or evidence confirming the strength of the recovery. Over the longer term, investors are also concerned over the eventual withdrawal of stimulus programmes.

While most of not all economic data confirm the worst has passed and the recession is largely over, the strength of the recovery remains debatable.

On Thursday, Wall Street fell after sales of existing US homes unexpectedly fell 2.7% in August 2009 – the first time in four months, even as the number of newly-laid-off workers seeking unemployment benefits fell for the third consecutive week

Japan's economy also remains weak. Latest exports for Aug 2009 plunged 36% y-y, and some 0.7% from July 2009. Car shipments fell by half due to poor global demand. Imports slumped 41.3% y-y, reflecting weak consumption in Japan, where unemployment is at a record high.

To sustain current gains, investors globally will need to obtain more evidence of the strength of the economic turnaround.