Following a week of subdued performance, global equity markets recovered briefly last week, with the MSCI AC World Index rising 0.12 per cent in US dollar terms (0.1 per cent in ringgit terms, given the depreciation of the USDringgit exchange rate over the week) as positive Western developed market performance powered its returns.
European equities, as represented by the Stoxx 600 Index, rose 1.38 per cent in euro terms (0.12 per cent in ringgit terms, given the depreciation of the euro-ringgit exchange rate over the week) amid the endorsement of the Basel III rules which boosted the valuations of European banks. Meanwhile, gains in the US equity market were slight, as the S&P 500 Index rose 0.13 per cent over last week.
Japanese equities, as represented by the Nikkei 225 Index, lagged its developed market peers, as it fell 1.58 per cent over the week.
Little was changed over in Emerging and Asian equity markets over the week, as the MSCI Emerging Markets Index and MSCI Asia ex Japan index declined a slight 0.68 and 0.64 per cent respectively over the week.
East Asian equities, at large, continued to see returns in the red last week, although their losses were smaller than that the week before.
China’s onshore CSI300 Index fell 0.5 per cent over the week, while the onshore Shanghai Composite Index and offshore HSML 100 Index dipped 1.46 and 1.38 per cent respectively over the week.
Meanwhile, Korea’s KOSPI and Hong Kong’s HSI indices fell 1.41 and 1.6 per cent respectively. Taiwan’s equity market was the poorest performer amongst markets under our coverage, as the TWSE index fell -2.23 per cent over the week. In Southeast Asia, stronger performances were witnessed, with Indonesia’s JCI Index rebounding with a 0.93 per cent weekly gain, while Thailand’s SET Index and Malaysia’s KLCI Index extended their gains a 0.14and 0.2 per cent gain last week respectively.
Singapore’s STI, on the other hand, dipped 1.44 per cent over the week. In other emerging markets, India’s SENSEX Index staged a comparatively strong performance (gaining 1.12 per cent over the week) and had ended the week as the best performing market under over coverage. Meanwhile, Brazil’s Bovespa Index and Russia’s RTSI$ Index fell 0.94 and 1.43 per cent respectively over the week alongside the 1.71 per cent decline in the prices of WTI crude oil over the week to US$57.36 per barrel.
Malaysia: Manufacturing PMI at 43-month high
Malaysia’s manufacturing sector registered the strongest upturn in over three and a half years, with Purchasing Managers’ Index surging to 52 points from the previous month’s 48.6 points.
After several months of contraction, we have finally seen the long-awaited improvement in the health of the manufacturing sector which was supported by the ameliorating domestic and overseas demand condition.
In November, we saw the manufacturing firms increased their purchasing activity, which ended the six-month period of contraction.
On top of that, output growth was registered at the fastest rate in nearly three years, underpinned by the robust foreign demand for Malaysia’s goods. Given the strongest business confidence among the manufacturing community in nearly four years, it is likely to drive the fourth quarter economic activity as it accounts for more than 20 per cent of Malaysia’s GDP.
India: November’s Nikkei India Composite PMI drops
The Nikkei India Composite PMI contracted to a three month low of 50.3 in November from 51.3 in October 2017. Growth in the manufacturing sector was offset by a decline in services activities during the month.
The service sector fell into contraction territory during November, following growth in the previous two months. Service activity declined as a result of decline in new business during November.
Service firms attributed sluggish demand and lower customer turnout to the Goods and Service Tax. The manufacturing sector reported growth in new work during November.
Furthermore, the rate of expansion accelerated to the fastest since October 2016. Manufacturers raised their staffing levels at the fastest pace since September 2012 in response to stronger growth in new orders.
Despite unfavourable demand conditions, service providers also continued to add to their workforce numbers. Rising input cost inflation affected the manufacturing and service sectors. For the service sector inflation accelerated to the fastest since October 2013 while the manufacturing sector witnessed input cost inflation rising at the strongest since April.
Manufacturing and services firms were unable to fully pass on the higher cost burden to consumers due to competitive pressures.
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Source: Borneo Post Online