Bursar-Expect Some Sunshine This Year

Investment Banks are back on number crunching and scenario building. They expect a better year for stocks.

I am posting this news article as a benchmark to view the actual performance of the Bursar until the last trading day of the last week of 2010.

Let us read what they have to say.

"Share prices on Bursa Malaysia are likely to start the new year on a positive tone next week as investors return to swarm the market amid improving signs of economic recovery globally, dealers said.

The market, which closed for three consecutive Fridays starting Dec 17 last year for public holidays, had restrained some of these investors from taking heavy positions over long weekends. The local bourse was also closed for the New Year celebration yesterday.

This week, the local stock market is expected to be buoyant again with prospects for the new year remaining positive should the pace of economic recovery is maintained, said a dealer.

According to MIDF Amanah Investment Bank Bhd, strong earnings growth with more than 20 per cent is expected to be registered in the media, construction, utilities and shipping companies.

However, the strong earnings growth may not necessarily translate into positive investment recommendation as the latter is a matter of valuation, it said.

The main downside risk for earnings would be the rollback of public sector support where a smaller public spending especially on infrastructure projects would undermine earnings of companies drawing on government-related projects.

“More importantly, corporate Malaysia has to be wary about the pullback of monetary stimulus, as we expect an end to the easy money policy this year. Interest rates will start climbing again and that means a different kind of monetary dynamics that companies will have to handle,” the investment bank said in its research note.

MIDF is projecting the FTSE Bursa Malaysia Kuala Lumpur Composite Index to move to the 1,450 level this year.

Throughout the week just ended, trading was moderate with the FBM KLCI moving within 1,264.83 and 1,275.22 points.

On a Thursday-to-Thursday basis, the FBM KLCI rose 12.25 points to 1,272.78 from 1,260.53 the previous week.

The Finance Index jumped 172.90 points to 11,053.40, the Plantation Index increased 82.82 points to 6,362.91 while the Industrial Index eased 2.26 points to 2,654.51.

The FBM Emas Index surged 114.13 points to 8,507.61, the FBM Top 100 Index increased 95.34 points to 8,308.89, the FBM70 Index rose 155.84 points to 8,269.22 and the FBM Ace Index was 81.06 points higher at 4,299.58.

A total of 2.223 billion shares worth RM2.978 billion changed hands during the week compared with 1.714 billion shares worth RM2.713 billion traded previously.

Volume on the main market rose to 1.905 billion units valued at RM2.899 billion from last Thursday’s closing of 1.471 billion shares valued at RM2.656 billion.

Turnover for call warrants surged to 104.154 million units worth RM18.766 million from 46.024 million units worth RM6.693 million previously.

The ACE Market volume improved to 146.994 million shares valued at RM39.569 million from last Thursday’s 140.415 million shares valued at RM35.003 million. — Bernama"

Fear and Anxieties over ASEAN -India FTA

What is good for the so-called majority may not be good for minority groups. INdia has now exhibit fear and trepidation regarding some backwash effect of the ASEAN-India Free Trade Area Agreement.

Read the Bernama report on this.(2nd January 2010).

"Finally the Asean-India Free Trade Agreement (FTA) came into effect on Jan 1, but with some trepidation on the Indian side, as fears and criticism mount on the trade pact, drafted after almost six years of tough negotiations.

A range of cheaper products — largely from Malaysia, Thailand and Singapore, would soon enter the Indian market, as the three economies will implement the FTA with India, Asia’s third largest economy, from Jan 1 in the first phase.

“We are not against the agreement but fishermen in Kerala are unhappy because imports will affect the livehoods of traditional and small scale fishery sectors.

“Our coastal fish vendors who are mostly women will suffer, if cheaper fish enters our market,” T Peter, president of Kerala Independent Fish Workers Federation, told Bernama in a telephone interview.

About one million fishermen in the southern state of Kerala rely on the sea. In Kerala, there had been strong agitation from coconut, cashewnut and spice growers, who fear the deal, would jeopardise their livelihoods, as cheaper products from neighbouring countries enter their market.

Under the FTA, considered the world’s largest, covering a market of nearly 1.8 billion people, tariffs would be gradually slashed for over 4,000 product lines over a staggered period, by 2016, but sensitive products on both sides were shielded to some degree.

“The business community supports the agreement, that is a positive significance but there had been lot of criticism from states like Kerala, such as tea and coffee planters. Now some sectors will surely come under pressure at home.

“Asean will gain substantially from the market access and Asean’s exports to India will increase substantially, but our exports will be modest,” said a senior Indian official familiar with the FTA negotiations.

India’s trade with the three Asean economies stands at US$40 billion (RM140 billion), forming the bulk of the India-Asean total trade volume of nearly US$44 billion (RM154 billion).

But skepticism stills hovers on the deal, as some Indian-Asean watchers believe several domestic sectors will find it hard to compete with the more competitive Southeast Asian players.

“FTA is more political rather than economics. We have to wait for another five years to see the impact on trade, the economic bite will only come later.

“But for now the statement of intent is more important, the political linkages had been established,” added Prof Manoj Pant, at the Centre of International Trade and Development, in Jawaharlal Nehru University.

So, the effects will come very much later. It's politics today and economics tomorrow.