Wednesday, August 10, 2011

FBM KLCI Slid Following Plunge In Wall Street , S&P Cut, 31 July - 6 August 2011 Review

Equity
It was one of the worst weeks in recent times for equity markets all over the world. FBM KLCI, the local market’s benchmark index, dropped 1.57% week-on-week (WoW), following a massive sell down on Wall Street. Last Thursday, Wall Street recorded the biggest drop in a single day since November 2008. As the market took a much needed break over the weekend another shocker came as credit rating agency Standard & Poor’s downgraded the US top-tier credit rating for the first time in history from AAA to AA+. However, the FBM KLCI managed to outperform the regional as the MSCI Asia ex-Japan plunged 7.6%.

Equity Market Outlook
We remain optimistic the market will end the year on a positive note. We remain bullish on the market due to the ongoing economic and political reform. However, we acknowledge that the growing external risk will have a negative impact and might derail growth. Thus, tactically we are reducing equity exposure while focusing on relatively high growth sectors such as construction, oil and gas and banks.

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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