Outflow of funds likely to ease market rally

RISING outflow of institutional funds is expected to ease the rally on the local bourse with the FBM KLCI trending lower towards the 1,5601,550 points support level.

Affin Investment Bank head of retail Research Dr Nazri Khan said weaker commodities, falling ringgit, eurozone fears, absence of China’s monetary stimulus and disappointing global economic data were expected to dampen buying sentiment on Bursa Malaysia this week.

On the domestic front, Nazri expected the market to start pricing in political concerns ahead of the 13th general election after the launch of Felda’s prospectus.

For the week just ended, the market was mostly higher, despite cautious sentiment regionally due to uncertainty in the eurozone and weak data from the United States.

On a Friday-to-Friday basis, the FBM KLCI added 22.47 points to 1,573.59.

The Finance Index earned 203.62 points to 14,028, the Industrial Index rose 44.79 points to 2,755.48 and the Plantation Index advanced 152.06 points to 8,329.78.

The FBM Emas Index jumped 147.69 points to 10,729.15, the FBM ACE Index shed 51.86 points to 4,224.84, the FBM Mid 70 Index surged 152.35 points to 11,649.35 and the FBM T100 Index improved 148.27 points to 10,557.29.

Weekly volume fell to 4.3 billion shares, valued at RM7.03bil, from 4.35 billion shares, worth RM6.14bil, registered last week.

Main Market turnover advanced to 3.03 bil-

TOKYO

EUROPE’S sovereign debt woes will continue to dog Japanese equities, dealers said Friday, after the Tokyo bourse closed down for the ninth straight week.

In the week to June 1, the benchmark Nikkei 225 index at the Tokyo Stock Exchange lost 1.63% or 140.14 points, to 8.440.25.

The market has now wiped out all its gains made since the turn of the year and is now 0.2% down from the last trading day of December, Dow Jones Newswires reported.

The broader Topix index of all first-section issues fell 1.83%, or 13.18 points, to 708.93.

On Friday, the Nikkei slid 1.20% to 8,440.25 as sentiment soured amid worries about the US economy and the yen’s surge against the euro, driven by widespread fears over Europe’s fiscal woes.

“A full-fledged rebound in the equities market is unlikely, since the global economy is likely to remain sluggish, given lingering eurozone debt problems,” said Mizuho Securities senior technical analyst Yutaka Miura.

“To me, the level of stock prices in Tokyo is lower than they should be, if prices are to reflect corporate performances,” said Seiichi Suzuki, strategist at Tokai Tokyo Securities.

Investors are closely monitoring US jobs data due out later on Friday, “and if the data help boost share prices in Europe and the

NEW YORK

US stocks were sucked deeply into global economic downdrafts last week, as growth stalled across major economies and data from four continents painted an increasingly grim picture for the rest of the year.

A big loss on Friday sent the Dow lower than it started 2012 for the first time, while the other major indices were near to giving up hard-wrought gains since January.

The blue chips of the Dow ended the holiday-shortened week at 12,118.57, down 3.3% for the four days and 0.81% off for the year.

The broader S&P 500 gave up 3.0% in the week to 1,278.04, while the Nasdaq lost 3.2% ending at 2,747.48.

While Greece, Spain and the return to crisis of the eurozone was a constant dark cloud over trade, more data showing China’s slowdown, and figures confirming that the US remained stuck in its sluggish growth mode, were what really turned US investors into bears.

On Friday, industrial activity indices in both countries showed slowing, and US jobs data for May came in as a real disappointment, with new jobs creation of a meager 69,000 positions less than half what was expected.

“It’s an ugly day for US stocks, as a disappointingly weak report on May payrolls has thoroughly rattled investors,” said Elizabeth Harrow of Schaeffer’s Investment Research.

In addition, investors’ hopes for a sign that China will move to stimulate growth were

June 1 lion shares, worth RM6.85bil, from 2.87 billion shares, valued at RM5.92bil, recorded last week.

Volume on the ACE Market decreased to 775.57 million shares, worth RM112.84mil, from 958.33 million shares, valued at RM140.44mil, transacted previously.

Warrants decreased to 483.14 million units, worth RM65.17mil, against last week’s 497.66 million units valued at RM64.92 mil. - Bernama United States, that may in turn boost Japanese stocks,” Suzuki said.

However, he did warn that “given the bearish sentiment in Tokyo, if (the US jobs data) turn out to be better than expected, it could be interpreted as a negative reading, a possibility of a fresh monetary easing policy lowered“. - AFP dashed when the government signaled that no such plan was in the works.

Stocks sensitive to spending by American and Chinese consumers and industries took solid hits during last week: commercial banks, fast food franchisers like Yum Brands and McDonald’s, heavy equipment vendor Caterpillar and even Apple, the market leader by size. - AFP

LONDON

INVESTORS will be watching for steps or hints by the Bank of England and European Central Bank to jump start stalled growth in a short trading week due to the diamond jubilee public holidays.

The benchmark FTSE 100 index of leading shares finished at 5,260.19 points on Friday, down 1.71% from a week earlier.

Trading in London will be limited to three days this week due to celebrations on Monday and Tuesday marking Queen Elizabeth II’s 60 years on the throne.

“Britain might be about to enter a long weekend of celebration and partying, but the situation will probably still be bleak when we wake up again on Wednesday morning,” said Chris Beauchamp, a market analyst at IG Index.

Developments in Spain, which is struggling to keep its banks solvent and reduce its budget deficits, and the prospects of an anti-bailout party winning an election in Greece are likely to colour sentiment.

In Britain, Thursday’s rate decision by the Bank of England’s Monetary Policy Committee is likely to be the top event.

Analysts widely expect it to keep its key lending rate a record low 0.50%.

But with a string of weak data raising questions about the health of the British economy, analysts will be looking at whether the BoE restarts its asset-buying programme, which was designed to stimulate business activity.

The BoE has already injected 325 billion ASIAN stocks fell for a fifth week, the regional index’s longest streak of weekly losses in a year, as Spain’s borrowing costs soared and amid further signs that China’s economic slowdown is deepening, dimming the outlook for companies dependent on global demand.

The MSCI Asia Pacific Index fell to levels last seen in December, with Japan’s Topix Index recording a ninth week of decline, the longest such run since 1975. HSBC Holdings Plc, Europe’s biggest lender, fell 3%. China Railway Construction Corp. dropped more than 7% as China’s industrial production expanded at a slower rate and the country ruled out stimulus measures on a scale similar to 2008.

“Investors are still not convinced about the debt crisis in Europe and that’s being reflected in higher bond yields in Spain and Italy,” said Khiem Do, Hong Kong-based head of Asian multi-asset strategy at Baring Asset Management (Asia) Ltd., which oversees about US$8bil. Europe is “the most significant risk from a global investor view point. Over the past 12 months, the Western world has been trying to find holes in the China growth story.”

The MSCI Asia Pacific Index fell 0.2% to 111.38 last week. The gauge dropped 10% in May, the most since October 2008, as economic reports showed the economies of China and the U.S. slowing while the debt crisis that began in Greece spreads to larger countries in Europe.

The losses erased US$4.5 trillion in global equity value last month, according to data compiled by Bloomberg. That dragged the value of shares on the MSCI Asia Pacific Index to 11.4 times estimated earnings, according to data compiled by Bloomberg. That compares with 12.2 times for Standard & Poor’s 500 Index companies and 9.8 times for the Stoxx Europe 600. Topix Losses Japan’s Topix Index declined 1.8% as it fell for a ninth week, its longest losing streak since September 1975, as Europe’s crisis crimped the outlook for exporters and sent the yen to its highest level against the euro since 2000. The benchmark Nikkei 225 Stock Average lost 1.6%.

Australia’s S&P/ASX 200 Index gained 0.9 % and South Korea’s Kospi index increased 0.6%. (US$525bil, 406 billion euros) into the British economy by buying up government and corporate bonds.

Investors will also be looking at whether the European Central Bank on Wednesday cuts rates or hints at any measures to calm tensions in the eurozone.

The corporate front should be relatively quiet, with EasyJet and the IAG Group, which unites British Airways and Iberia, reporting passenger numbers. - AFP Indonesia’s Jakarta Composite Index slumped 2.6% as coal miner PT Bumi Resources plunged 20% on the reduced outlook for fuel demand and the prospect of quotas on production.

Hong Kong’s benchmark Hang Seng Index slipped 0.8% and Shanghai Composite Index, which tracks shares on China’s biggest stock market, increased 1.7% amid speculation that slowing manufacturing activity and lower home prices give the government room for additional measures to support the economy. Europe Declines Companies that do business in Europe declined. Canon Inc., the Japanese camera maker that counts Europe as its largest market, dropped 5.6% to 3,050 yen in Tokyo. HSBC fell 3% to HK$60.85 in Hong Kong. Hutchison Whampoa Ltd., the port operator that gets about 55% of revenue from Europe 3.8% to HK$64.

China has no plan to introduce stimulus measures on the scale deployed during the global financial crisis to counter this year’s economic slowdown, the official Xinhua News Agency reported. The government has cut banks’ reserve ratios three times since November and vowed to fast-track infrastructure projects to boost growth. No Monetary Stimulus “The Chinese government will continue to cut the reserve ratio but I don’t think they will implement any monetary stimulus,” Cedric Ma, Senior Investment Strategist at Convoy Asset Management Ltd. “There is no emergency right now.”

China Railway Construction Corp., a builder of train lines and other infrastructure, dropped 7.3% to HK$5.86.

BYD Co., a maker of electric cars that’s partly owned by Warren Buffett, dropped 3.1% to HK$15.70.

PetroChina Co., the country’s biggest listed company, slipped 3.9% to HK$9.78 as oil entered a bear market after falling more than 20% from its high for the year.

Materials and energy companies were among the industries with the biggest declines on the Asia-Pacific gauge last week.

Bumi Resources dropped 20% to 1,410 rupiah in Jakarta. JX Holdings Inc., a Japanese petroleum company, dropped 6.3% to ¥375 in Tokyo, its lowest level since at least 2010. - Bloomberg