Directionless trade

Shares on the Bursa Malaysia remained range bound on Friday, Dec 4. The FBM KLCI fluctuated within a very tight band while market breadth was biased towards the negative. Trading was somewhat directionless as investors waited for a clearer outlook for the stock market in the near to medium term.

There was no clear lead either from Wall Street or Asian markets. US stocks closed lower overnight with selling pressure coming in near the close.

Investors demonstrated some jitters ahead of a key unemployment report due out Friday. Despite another drop in new jobless claims, the country’s high unemployment rate will continue to weigh on markets for the foreseeable future.

Concerns that consumers will remain tight-fisted amid anxiety over their jobs and falling disposable incomes were underlined by an unexpected drop in the index of activity for the service industry.

The index dipped to 48.7 in November, from 50.6 in October. A figure below 50 indicates contraction. The fall is worrying given that the service industry, including businesses such as banks, airlines, hotels and retail, accounts for 80% of the country’s economic activity.

Another survey showed disappointing retail sales for November, marking a lackluster start to the crucial holiday shopping season.

For the moment, there is little evidence to support a sustained, strong rebound for the global economy. This will be a drag on the rally even though ample liquidity will probably keep prices fairly resilient.

The FBM KLCI was in negative territory throughout the trading day but losses were limited. The benchmark index closed just marginally lower at 1,270.2 points, barely changed for the week. There were about five losing stocks for every four gaining ones at the close.

Some of the bigger losers for the day include the rights and shares for BTM Resources, CIMB and Hong Leong Financial Group. At the other end, Measat, EON Capital and Tanjong plc were among the bigger gainers. About 658 million shares were traded on Friday.