Wednesday, June 1, 2011

Rough Week for Malaysia Equities but FBM KLCI Closed Higher, 23 May- 28 May 2011 Review

It was another volatile week for Malaysian stock market as equities endured tremendous selling pressure in the beginning of the week. However, the FBM KLCI managed to recover some losses and closed the week higher thanks to big cap such as Tenaga, Petronas Dagangan and Sime Darby. But sentiment remained weak with the broader market being sold down heavily as investors turned more risk-averse amid global uncertainties. For the week, the FBM KLCI rose 7 points or 0.5% to close at 1,548 points. The local market outperformed the region with the MSCI Asia ex-Japan down 0.6%. The FBM EMAS Index rose 55 points or 0.51% to 10,634 points while the FBM Small Cap Index dropped 1.39% to 12,799.3 points. The average traded volume on
the local bourse declined for the fifth week.

On the global front, investors were haunted by the long unsolved issues, such as European crisis and weakening global economic growth. We expect the crisis will be prolonged and will limit the upside potential.

Equity Market Outlook
Although global markets play a vital role in deciding the FBM KLCI direction, we believe this time round, Malaysia equity market is strong enough to buck the trend. We see construction to be the market mover as the government is rushing to implement the MRT project to create the feel good factor. Once the investors recognize the potential of the market, we reckon the index could move away from the consolidation phase.

Equity Market Strategy
Stock picking is still our strategy with preference for liquid fundamental stocks on weakness.

Source: ING Funds Berhad

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