Weekly
review
The major indices made hefty gains
in a low volume week with investors embracing
better-than-expected economic data. Much of the week was spent
in anticipation of the February employment report, released
Friday. Although the U.S. continued to shed jobs, the decline
was smaller-than-expected as economic forecasters overestimated
the impact of severe winter weather. For
the week, Dow Jones was up 2.3%, S&P 500 advanced by 3.1% and
Nasdaq was up 3.9%.
Importantly, the
unemployment rate held steady at 9.7% versus the expected
increase to 9.8%, with underlying data suggesting job creation.
However, the increase in employment is due to hiring of
part-term workers. In other positive economic items, February
ISM services rose to 53.0 from 50.5, topping the consensus of
51.0 and posting the highest reading since 2007.
There were a few corporate items
of note as deal making picks up with CF Industries upping the
ante in its renewed bid to acquire Terra Industries (TRA), which
previously agreed to be acquired by Yara International.
Separately, AIG (AIG) is selling AIA Group, Ltd., to Prudential
Plc (PUK) for US$35.5bn.
Asian stocks rose for a second week, almost erasing the MSCI
Asia Pacific Index’s losses this year, as reports on global
semiconductor sales, Indian manufacturing and U.S. jobless
claims boosted optimism for an economic revival. The MSCI
Asia Pacific Index gained
1.9% this week, paring its decline this year to 0.1%. Japan’s Nikkei
225 Stock Average increased
2.4%, its largest gain this year. India’s Sensitive
Index surged
3.4%, this week’s biggest advance among benchmarks in the
Asia-Pacific region, after reports showed the nation’s exports
and manufacturing output climbed. China’s Shanghai
Composite Index slipped
0.7% on concern bank lending may slow and interest rates will
rise as inflation accelerates. Hong Kong’s Hang Seng Index rose
0.9%. Australia’s S&P/ASX
200 Index increased 2.8%
even as the nation’s central bank raised its benchmark interest
rate to 4% from 3.75% on March 2. Raw-material suppliers advanced
the most this
week among the MSCI Asia Pacific Index’s 10 industry groups,
followed by information-technology companies, on speculation a
global recovery will boost demand for commodities.
The local bourse hit a
psychologically important mark of 1,300 points at 4pm last
Friday before ending the week at 1,299.8 points. It is
marginally higher than the previous week’s close of 1,270.78
points. The FBM KLCI extended its gains at the beginning of the
week on positive news flows about the domestic economy. Blue
chips were the focus of last week’s trading as the satisfactory
4Q2009 earnings buoyed investor confidence. Bank Negara raised
the overnight policy rate by 25 basis points to 2.25% last
Thursday, the first hike in almost four years. It said the rise
was justified given the significant improvement in the domestic
economy and moderate rise in inflation. Banks with high variable
rate loan and CASA ratio including Malayan Banking Berhad and
Alliance Financial Group would benefit the most. On the
corporate front, The Employees Provident Fund has made an offer
to buy the rest of Malaysian Resources Corp at RM1.50 each after
it triggered the general offer rule.
Boustead Holdings marked a
significant corporate exercise by disposing of its 80% stake in
BH Insurance (M) Berhad to AXA Affin General Insurance for
RM363m.
Economic news
US: Services sectors
accelerated in February more than anticipated according to the
Institute for Supply Management (ISM)’s index of
non-manufacturing businesses. The index increased to 53.0 from
50.5 in January. Initial jobless claims fell 29,000 to 469,000
in the week of 27 Feb. This marks the lowest level since 9 Jan.
Non-farm unit productivity was revised up to a 6.9% (from 6.2%
initially reported annual rate in 4Q09, while unit labor costs
were revised down to a 5.9% (from -4.4%) rate of decline. Same
store sales, or sales at stores opened for at least a year,
jumped 4.0% in February.
Malaysia: Bank Negara
Malaysia (BNM) has raised the Overnight Policy Rate (OPR) by
25bps to 2.25% at its monetary policy committee (MPC) meeting on
4 Mar as the economic recovery is firmly established. Exports
grew strongly by a double-digit of 37.0% yoy in January, after a
gain of 18.7% in December.
Disclaimer : Information herein has been obtained from and is based upon sources Pheim Unit Trusts believe to be reliable, we do not guarantee its accuracy and it may be incomplete or condensed. All opinions and estimates constitute Pheim Unit Trusts’ judgment as of the date of the report and are subject to change without notice. This report is for informational purposes only and is not intended as an offer or solicitation for the purchase or sale of units.
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