Trade Shares or Stocks in Bursa Malaysia|How to start Trading | Trade Stocks in Bursa Malaysia | How to Open Trading Account | How to Open CDS Account | What is Collateralised Trading | Discretionary Financing | Share Margin Financing | CDS Share Transfer | Securities Borrowing and Lending (SBL) | Regulated Short Selling (RSS) | Brokerage | Internet Trading Brokerage Discount | Cash Upfront Brokerage Discount | Clearing Fees | Contract Stamp Duties | Bursa Malaysia | Composite Index | Bursa News | Listed Companies News | Market News | Market Outlook

Reuters reported that VCAP Management expects Malaysia’s stock market to hit the bottom of the downcycle in the first half of 2009 and tips plantation stocks to gain on an expected recovery in crude palm oil prices.

“My view is in the first half of this year we probably will see the worst of the stock market, and into the second half of this year, I believe the stock market will start to perform,” said i-VCAP chief executive officer Zainal Izlan Zainal Abidin.

Malaysian stocks have gained 0.33 per cent so far this year after a 39 per cent drop in 2008. Regional peers have performed worse, with Singapore dropping 2.82 per cent and Thailand down 10.03 per cent.

Economic growth this year is expected to slow to 3.5 per cent in the grip of the global economic downturn, after an estimated 5 per cent growth in 2008, the government says.
Many private economists are more pessimistic. Brokerage CLSA, for example, is looking at a contraction of 1.2 per cent.

“Stock markets typically would lead the economy and a lot of these bad economic numbers have been discounted in stock prices,” Izlan said in an interview.

i-VCAP is a wholly-owned subsidiary of state fund manager Valuecap. The firm manages MyETF Dow Jones Islamic Market Malaysia Titans 25, a syariah-compliant exchange traded fund with a net asset value of about US$150 million (RM541.5 million).

Izlan said plantation stocks, a big component of the benchmark stock index, are likely to perform better in the second half of the year as CPO prices rebound from their recent lows.

Domestic demand from big consuming countries such as India and China could drive up CPO prices to around RM2,500 per tonne over the next six to nine months, he said.

Benchmark CPO is currently trading around RM1,800 per tonne.

“It may not be as strong as before, but domestic demand from these countries is still there. We could see some recovery in CPO prices which will then contribute towards performance of the plantation sector,” said Izlan.

Shares in top Malaysian planter Sime Darby have gained 3.85 per cent this year and second-ranked IOI Corp is up 10.11 per cent.

Elsewhere, Izlan said Malaysian oil-and-gas companies have been hit by falling crude oil prices as new exploration activities slow.

But companies with a more diversified business model, such as KNM, Dialog and Kencana Petroleum, would fare better.

“Not all Malaysian oil-and-gas companies are providing support directly for exploration activities, some of them are providing other services such as maintenance and equipment upgrading,” said Izlan.

“So to some extent they are affected by lower exploration activities but this is partly offset by the fact that most of their services are required regardless of the level of exploration activities,” he added.

Related Posts:

• Stock Market in the Year of the Ox

Protradeshares wishes Chinese reader a Happy New Year. Below are an article from The Star for your contemplation.

THE Year of the Earth Ox commences on Monday and ends on Feb 13, 2010. Local investors and market punters generally seem to have high expectations as they step into the new Chinese Lunar year, expecting equities to recover after a disastrous showing in 2008, linking an ox to a bull.

Analysis suggests there may be a little more pain coming our way and should there be any solid positive sign of the market shifting trend from bearish to bullish, it should come about in the second half of this year at the earliest.

A positive mindset is always a good thing. But what is most important to a stock player is how the market will fare and whether one will make a lot of money and become wealthy in the coming year.

Obviously, I am no feng shui master and neither am I superstitious. Like many people out there, I depend on authorised access of historical data, charts development, and the help of various tools and resources available to forecast the future movements and trends of the market.

In the distant past of the Year of the Wood Ox from Feb 20, 1985 to Feb 8, 1986 the benchmark Composite Index (CI) of the then Kuala Lumpur Stock Exchange (KLSE), now called Bursa Malaysia, dipped by 95.37 points or 32%, easing from the 300.45 level to end at 205.08.

Prior to that, the market was already on a downward spiral due to a recession and 1985 was just a continuation of the trend.

During that period, the moving average convergence/divergence indicator triggered six rounds of buy signal, but the market failed to carve out a positive reversal pattern, as every rebound owing to oversold reason was not able to attract follow-through interest, which witnessed the key index puncturing, either at the 100-day simple moving average (SMA) or the 200-day SMA.

As for 1997, Year of the Fire Ox (Feb 8, 1997-Jan 27, 1998), the landscape was not any better.

The principal index of the local bourse plunged from 1,254.42 points to the 569.51 level, losing a hefty 684.91 points, or 55% on that Lunar calendar year.

However, unlike in 1985, Bursa Malaysia had a very promising start for that year, extending the upward trend of the Year of the Fire Rat in 1996.

Everyone was cheering and in a state of euphoria, with the CI marching up steadily and looking certain to eclipse the peak of the 1993 “superbull run”, but unfortunately, in a blink of an eye at 1,278.94 points on Feb 26, 1997, the stock market took a beating.

What initially appeared as a typical correction was later proven to be a total reversal, aggravated by the Asian financial crisis.

Except for a brief rally at the tail end of that lunar year, the local market hardly gained lost ground until the key index touched a low of 261.33 on Sept 1, 1998 after the Government pegged the ringgit at RM3.80 to the US dollar.

As such, if one were to track the 12-year cycle of the previous two similar Chinese zodiac animal and make interpretations strictly on the grounds of technical analysis, the outlook appears bleak, as the past indicates that the Oxen always stumbles, before the benchmark CI eventually finds its way.

The reasons are simple. Most will recall that Bursa Malaysia was hit hard during the Asian financial crisis in 1997 and it took the market a painful 18 months to bottom out.

Now, with the health of the global economy at its worst since the “Great Depression” in 1929, which will likely have an impact on the Malaysian economy and corporate earnings, the local bourse may need a longer time to heal and recover.

A peek at the historical daily charts indicates the CI is still in the progress of tracing out a perfect downtrend pattern, as in 1997. Although they dive from a different altitude, the magnitude and the characteristic of the two bears appear to be the same but the chief concern here is the “negative crossing” of the 100-day SMA against the 200-day SMA, which is still intact.

There is no easy way out. After finding the ebb, the CI must show persistent recovery and thereafter, maintain the posture above the 100-day SMA and the 200-day SMA for a period of time to untangle the “dead cross”.

Typically under normal circumstances, the whole process takes about four to six months.

Only if the key index is able to fulfil these important criteria, can it lead the market back to the mending path.

Related Posts:

• ValueCap said Recovery in Second Half of 2009