equity markets

 
 

Oil prices surge after suspected attacks on tankers

NEW YORK, June 14 — World oil prices rose yesterday following suspected attacks on two tankers in the Gulf of Oman, worsening frayed tensions in the crude-rich Middle East region. The rise in oil prices — jumping as much as 4.5 per cent before…


High valuations, slow earnings in equity market

KUALA LUMPUR: The Malaysian equity market is seeing more expensive valuations and slower earnings growth compared with its regional peers, according to HSBC Private Banking managing director and chief market strategist for Asia, Fan Cheuk Wan.

“Within our Asia equity portfolio, we’re still cautious on the Malaysian equity market mainly because of its expensive valuations versus the other cheaper regional peers. The earnings growth forecast for the Malaysian equity market still remains at single-digit, lagging behind other higher growth equity markets that we favour, such as China.

“For Malaysia, we forecast single-digit earnings growth but with the valuation premiums versus the regional’s average, it would cap the upside potential of the Malaysian equity market,” she told a press conference on the HSBC Private Banking 2019 2H Investment Outlook in Asia today.

Reflecting on Asian equities, it maintains a mild overweight position on China and Singapore. Fan said Singapore is the cheapest market in Asean and it has the lowest price-to-earnings and the highest dividend yield.

“Based on our year-end forecast, we still expect the FBM KLCI to come in at 1,740 points this year, some modest upside potential because the economy still remains resilient and there will be modest earnings growth for this year. In terms of the upside potential, there are cheaper markets that can deliver more upside,” elaborated Fan.

Nevertheless, HSBC Private Banking chief market strategist for Southeast Asia James Cheo still expects a 3-4% upside in the equity market.

“How we want to play it is to look at the domestic sectors. The consumption and infrastructure plays are where we think the opportunities are, and how it pans out could be end of this year or next year,” Cheo said.

On the ringgit, he said in the near term, there could be a risk-off where there will be more demand for the dollar given the uncertain environment.

“The domestic economy in Malaysia is still resilient so it reduces the downside for the ringgit. The ringgit could still be fairly resilient against the dollar,” said Cheo, adding that its year-end target for the ringgit is RM4.30 against the US dollar.

On Malaysia proposing a new currency based on gold, Cheo said it is an interesting idea but noted that there are trade-offs and that it should be thoroughly considered.

“It’s an international monetary system and just can’t be implemented on a single country. It requires a global consensus. Given how things are, it looks like things are more bilateral nowadays.

”We have been on a fiat currency model for many years and it has served us well. Our money supply has been growing significantly,” said Cheo.


Be brave in raising red flags, Bursa chief tells CFOs

KUALA LUMPUR: Chief financial officers (CFOs) should be brave enough to voice out about any wrongdoings in a company, Bursa Malaysia Bhd chairman Datuk Shireen Ann Zaharah Muhiudeen (pix) said today.

The CFOs according to her, need to be the gatekeepers of their company to ensure transparency and instil investors’ confidence into the industries and capital markets.

“Governance is the baseline of transparency. If you are transparent in your processes, people will feel confident and once you have confidence, people will reinvest, whether it is long term, foreign direct investments (FDIs) or through equity markets. That is what we want.

“If CFOs are tough and are saying no, or if they see red flags, they must escalate it. It cannot be a situation where CFOs are frightened to say anything… even auditors are so scared,“ she told reporters after delivering her keynote address at the CFO Conference 2019.

Shireen also stressed that it was important for everyone to come together as a group to empower each other to stand out and became stronger.

“When we are stronger, then we can get to a platform where people know that the CFOs are not going to tolerate nonsense, not going to tolerate questions of contracts and that they are going to say things that doesn’t look right… and they will get legal counsel. These are all important attributes of a CFO,“ said Shireen.

On bringing in more investors into the country, the Bursa chairman said the recent bad press on the country needs to stop.

She urged companies to start talking about the good reputation that Malaysia possesses.

“Malaysia is a country that people should invest in. We shouldn’t be looked upon the way we have been looked up of late. That needs to change. We don’t deserve that.

“We are a country that have people with great skills, a lot of resources and good institutions,“ she said.


Be brave in raising red flags, Bursa chief tells CFOs

KUALA LUMPUR: Chief financial officers (CFOs) should be brave enough to voice out about any wrongdoings in a company, Bursa Malaysia Bhd chairman Datuk Shireen Ann Zaharah Muhiudeen (pix) said today.

The CFOs according to her, need to be the gatekeepers of their company to ensure transparency and instil investors’ confidence into the industries and capital markets.

“Governance is the baseline of transparency. If you are transparent in your processes, people will feel confident and once you have confidence, people will reinvest, whether it is long term, foreign direct investments (FDIs) or through equity markets. That is what we want.

“If CFOs are tough and are saying no, or if they see red flags, they must escalate it. It cannot be a situation where CFOs are frightened to say anything… even auditors are so scared,“ she told reporters after delivering her keynote address at the CFO Conference 2019.

Shireen also stressed that it was important for everyone to come together as a group to empower each other to stand out and became stronger.

“When we are stronger, then we can get to a platform where people know that the CFOs are not going to tolerate nonsense, not going to tolerate questions of contracts and that they are going to say things that doesn’t look right… and they will get legal counsel. These are all important attributes of a CFO,“ said Shireen.

On bringing in more investors into the country, the Bursa chairman said the recent bad press on the country needs to stop.

She urged companies to start talking about the good reputation that Malaysia possesses.

“Malaysia is a country that people should invest in. We shouldn’t be looked upon the way we have been looked up of late. That needs to change. We don’t deserve that.

“We are a country that have people with great skills, a lot of resources and good institutions,“ she said.


Be brave in raising red flags, Bursa chief tells CFOs

KUALA LUMPUR: Chief financial officers (CFOs) should be brave enough to voice out about any wrongdoings in a company, Bursa Malaysia Bhd chairman Datuk Shireen Ann Zaharah Muhiudeen (pix) said today.

The CFOs according to her, need to be the gatekeepers of their company to ensure transparency and instil investors’ confidence into the industries and capital markets.

“Governance is the baseline of transparency. If you are transparent in your processes, people will feel confident and once you have confidence, people will reinvest, whether it is long term, foreign direct investments (FDIs) or through equity markets. That is what we want.

“If CFOs are tough and are saying no, or if they see red flags, they must escalate it. It cannot be a situation where CFOs are frightened to say anything… even auditors are so scared,“ she told reporters after delivering her keynote address at the CFO Conference 2019.

Shireen also stressed that it was important for everyone to come together as a group to empower each other to stand out and became stronger.

“When we are stronger, then we can get to a platform where people know that the CFOs are not going to tolerate nonsense, not going to tolerate questions of contracts and that they are going to say things that doesn’t look right… and they will get legal counsel. These are all important attributes of a CFO,“ said Shireen.

On bringing in more investors into the country, the Bursa chairman said the recent bad press on the country needs to stop.

She urged companies to start talking about the good reputation that Malaysia possesses.

“Malaysia is a country that people should invest in. We shouldn’t be looked upon the way we have been looked up of late. That needs to change. We don’t deserve that.

“We are a country that have people with great skills, a lot of resources and good institutions,“ she said.


Spooked public investors reach fork in risky road as asset growth slows

LONDON, June 12 — Global public institutions including central banks, sovereign wealth funds and public sector pension funds are increasingly worried about a worldwide economic downturn and are taking divergent investment strategies to adapt. An…


Asia stocks gain amid Mexico reprieve, firmer Chinese shares

TOKYO: Asian stocks, led by Chinese shares, gained on Tuesday as markets basked in relief following the U.S. decision to hold off from imposing import tariffs on Mexico as the two governments agreed a deal to combat illegal migration from Central America.

Hopes that U.S. interest rates will be cut as early as next week also provided support.

MSCI’s broadest index of Asia-Pacific shares outside Japan gained 0.65%.

The Shanghai Composite Index climbed 1.7% after China said on Monday that it will allow local governments to use proceeds from special bonds as capital for major investment projects in a bid to support the slowing economy.

Australian stocks rose 1.3%, South Korea’s KOSPI added 0.3% and Japan’s Nikkei edged up 0.35%.

U.S. stocks extended their recent climb on Monday, with the Dow rising for the sixth trading day.

Relief that the United States had stepped back from an immediate imposition of tariffs on Mexico encouraged buyers, though U.S. Secretary of State Mike Pompeo warned the United States could still slap tariffs on Mexico if not enough progress was made on its commitment to stem illegal immigration.

While global markets have been given some reprieve, fresh U.S. trade threats against China were seen limiting any major boost to investor sentiment.

U.S. President Donald Trump said on Monday he was ready to impose another round of punitive tariffs on Chinese imports if he cannot make progress in trade talks with Chinese President Xi Jinping at the G20 summit.

The U.S. president has repeatedly said he expected to meet Xi at the June 28-29 summit in Osaka, Japan, although China is yet to confirm any such meeting.

“The lift from the U.S.-Mexico trade development is likely to be a temporary one for the equity markets as the bigger issue between the United States and China remains unresolved,” said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui DS Asset Management.

“Nervousness will prevail in the markets until the G20 summit. And there is no guarantee that matters will improve even if the U.S. and Chinese leaders meet at the summit.”

Economists at Societe Generale said in a note that “the probability of the U.S.-China trade conflict drawing to an amicable conclusion has decreased significantly over the past few weeks.”

In the currency markets, the dollar extended gains it made against its peers in the wake of Friday’s agreement between the United States and Mexico.

The dollar index against a basket of six major currencies was a shade higher at 96.800 after advancing 0.2% on Monday.

The dollar was up 0.15% at 108.625 yen and the euro was steady at $1.1314 following a loss of 0.2% the previous day.

The benchmark U.S. Treasury 10-year yield stretched an overnight spike and touched an 11-day peak of 2.157%. The yield had risen about 6 basis points on Monday as the U.S.-Mexico deal boosted risk appetite and curbed investor demand for safe-haven government debt.

The Treasury market has experience volatility over the past week, with the 10-year yield having fallen to a near two-year low of 2.053% on Friday after a soft U.S. jobs report raised expectations for an interest rate cut by the Federal Reserve.

The Fed holds its next policy meeting on June 18-19.

The prospect of the central bank lowering rates this year had already risen earlier last week after a number of Fed officials including Chairman Jerome Powell hinted they were open to easing monetary policy.

U.S. West Texas Intermediate (WTI) crude oil futures were up 0.36% at $53.45 per barrel, finding some traction after sliding the previous day.

Crude oil fell on Monday, with U.S. futures losing 1.3%, as major producers Saudi Arabia and Russia had yet to agree on extending an output-cutting deal and with U.S.-China trade tensions continuing to threaten demand for the commodity.


Asian stocks rises on Mexico reprieve but Sino-US rift caps gains

TOKYO, June 11 ― Asian stocks made modest gains today after the Trump administration shelved plans for tariffs against Mexico, lifting Wall Street, however, fresh US trade threats against China are expected to limit any major investor sentiment…


Asian shares fall on weak data as focus shifts to rate cuts

SHANGHAI, June 4 — Asian shares fell today as weak economic indicators and an intensifying Sino-US trade war inflamed concerns about global growth, supporting safe-haven assets such as bonds. European equities are also expected to fall. In early…


Asian shares fall as weak data inflames growth fears

SHANGHAI: Asian shares fell on Tuesday, following a volatile Wall Street session as weak economic indicators and an intensifying Sino-U.S. trade war inflamed concerns about global growth, supporting safe-haven assets such as bonds.

Investor focus has shifted to monetary policy this week with Australia’s central bank all but certain to cut interest rates to a fresh low at its meeting on Tuesday and India also tipped to ease on Thursday.

Comments from the Federal Reserve on Monday, meanwhile, raised expectations the U.S. central bank is moving closer to a rate cut, as did a closely watched U.S. factory survey.

“Unless there’s a circuit breaker, and it may come in terms of a Fed cut, or it may come in terms of more Chinese stimulus or the European Central Bank later this week…equity prices and bond rates are going to continue to go lower,” said Greg McKenna, strategist at McKenna Macro.

The ECB holds its next policy meeting on Thursday and is expected to keep settings unchanged though there is growing speculation it could shift to a more dovish footing.

Losses across Asian equity markets on Tuesday followed falls on Wall Street overnight that saw the Nasdaq drop into correction territory. MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.3%, after earlier rising as much as 0.18%.

The broad index was pulled lower by Chinese shares. China’s blue-chip CSI300 index was 1.17% lower, and the Hang Seng lost 0.65%.

Seoul’s Kospi gave up 0.16%.

Defying the regional selloff, Australian shares were up 0.1% ahead of the expected interest rate cut by the Reserve Bank of Australia, as the bank hopes to revive growth.

Japan’s Nikkei gave up early gains to turn down 0.42%.

Underscoring slowdown concerns, U.S. manufacturing growth eased in May to its weakest pace in more than two-and-a-half years, defying expectations for a modest rebound.

Hostile rhetoric between Washington and Beijing continued, on Monday as U.S. President Donald Trump’s administration said that China was pursuing a “blame game” in recent public statements.

Adding to broader investor worries are fears that U.S. antitrust regulators could target Alphabet, Facebook, Apple and Amazon.

News of U.S. government plans to investigate the tech giants dragged down tech shares on Monday, driving the Nasdaq 1.61% lower to 7,333.02. The drop took the index more than 10% lower than its May 3 closing record.

The S&P 500 lost 0.28% to 2,744.45 and the Dow Jones Industrial Average eked out a 0.02% gain to 24,819.78.

BULLARD COMMENTS

U.S. Treasury yields rose slightly on Tuesday but remained near recent lows. U.S. 10-year notes yielded 2.1021%, up from a U.S. close of 2.081%, having touched its lowest level since September 2017 on Monday.

The two-year yield rose to 1.8837% compared with a U.S. close of 1.84%.

The fall in the two-year yield reflects raised expectations of a more accommodative Fed.

St. Louis Fed president James Bullard on Monday said that a U.S. interest rate cut “may be warranted soon” given risks to global growth posed by trade tensions and weak U.S. inflation.

Gold was down 0.11% at $1,323.27 per ounce, but still near three-month highs, and Japan’s yen strengthened, with the dollar dropping 0.05% against the Asian safe-haven to 108.01.

“Risk aversion has also been seen with the yen carry trade unwinding as the markets comprehend that the U.S. technology containment strategy towards China is unlikely to reverse,” analysts at Jefferies said in a note.

“In the short term, positioning has become so bearish that ‘a ceasefire’ could spark a risk rally.”

The euro was 0.11% stronger at $1.1252, while the dollar index, which tracks the greenback against a basket of six major rivals, was up 0.03% at 97.175.

Crude prices whipsawed, resuming their declines after a brief bounce on mounting trade worries.

U.S. crude was down 0.24% at $53.12 a barrel and Brent crude dropped 0.42% to $61.02 per barrel. – Reuters