Mixed economic data

Shares on the local bourse traded broadly lower at the start of the new week. The headline index, the FBM KLCI, opened in the red and lost ground as the day progressed. Market breadth was also negative throughout the trading day.

On a positive note, the selling pressure was relatively well absorbed. We suspect trading sentiment will remain lethargic in the coming days given the already high valuations and uncertainties in the global market.

Sentiment in key regional bourses was slightly more upbeat. Most bellwether indices in Asian markets closed in positive territory – despite losses on Wall Street last Friday. This may be attributed to stronger than expected GDP data for South Korea. Its economy grew 2.9% q-q in 3Q09, the fastest pace in seven years. This follows similar strong growth numbers for Singapore and China released earlier this month, which supported the view that economies are charting a V-shaped recovery after plunging in 4Q08-1Q09.

To be sure, 3Q09 GDP data for most countries will likely exceed expectations, buoyed by massive government stimulus policy and inventory rebalancing. However, the question of sustainability remains.

Case in point, Japan’s latest month-on-month exports number for September 2009 was lower for the third consecutive month. This suggests that whilst the fall may have hit bottom, a sustained recovery remains elusive. Relatively healthier Asian economies, including China, are still lacking in terms of consumption power, the primary driver for global growth.

The FBM KLCI ended the day seven points lower at 1,259.9. Some of the notable losers include Genting, Bursa Malaysia, IGB, IJ Land and CIMB. There were roughly five losing stocks for every two gaining ones at the close.

About 699 million shares changed hands. Green Packet-WA was the day’s most actively traded counter. Other actives include Metronic Global, GHL Systems, KNM, HIL Industries, Axiata, TA Enterprise and Notion Vtec. — InsiderAsia.