Asian business confidence wallows near 3-year low on trade worries, says poll

SINGAPORE, Dec 19 — A very cautious optimism remains among Asian companies in the fourth quarter as they wait to see whether there will be any breakthrough in a trade dispute between the United States and China, a Thomson Reuters/INSEAD survey…

Asian markets mixed ahead of Fed, oil struggles to recover

HONG KONG, Dec 19 — Most markets were mixed in Asia today as investors moved cautiously after the previous day's sell-off, while focus is on a Federal Reserve policy decision with opinions split on whether or not it should hike interest rates…

Slim chance of window dressing on Bursa next week

PETALING JAYA: The FBM KLCI is expected to end the year at circa 1,630 points with a slim chance of any window dressing, said Inter-Pacific Securities Sdn Bhd head of research Pong Teng Siew.

He does not expect local funds to do any window dressing, which would require a lot of money and may not be successful.

“If there is any window dressing at all, it would only happen in the last few days of the year, maybe one or two days before the year ends. It will be very last minute,” he told SunBiz.

Earlier in May, Pong said that the KLCI could end the year at 1,630 points if stock market earnings performance hold to a growth of about 6%.

“Today we are already at that level. If the earnings growth is worse, it will fall below 1,630 points. Looking at the way things are going, I believe it is likely to go below 1,630 points,” he added.

He said earnings growth are likely to fall below 6% based on third quarter data and growth since then, combined with the likelihood of a sharp drop in the next few days. Based on signals from the market, he expects earnings growth to come in around 4%.

Today, the FBM KLCI opened 13.15 points weaker at 1,628.47 and ended 6.31 points lower at 1,635.31 from yesterday’s close of 1,641.62.

For 2019, Pong said economic performance could be worse than 2018, depending on the government’s spending.

“If the government doesn’t spend because of poor oil prices or poor revenue from taxes or other reasons, things could spiral downwards and negatively affect corporate earnings. The government frequently takes the lead in spending and initiatives for infrastructure. If the government doesn’t spend for development expenditures, the momentum would not be there,” he said.

He said economic growth has to be at least 4% in order to be “healthy”, as a 3-4% growth would mean that there are parts of the economy that are stagnant or contracting.

Meanwhile, Areca Capital Sdn Bhd CEO Danny Wong declined to comment on window dressing activities at end-2018, saying that the short-term outlook is very sentiment-driven.

“Earnings for 2019 may not be as robust as 2018, especially in the second half of 2019,” he said.

However, he noted that Asia is still an engine of growth and maintained his positive outlook on economic growth and corporate earnings for next year.

“Earlier, I expected the third and fourth quarters this year to be better than the first and second quarters but it turned out to be worse. I still maintain my outlook but perhaps it has been delayed till 2019,” he said.

On foreign funds, which saw a large outflow so far this year, Wong expects foreign funds to return next year, for both equities and bonds, driven by 4-5% gross domestic product growth, the attractiveness of the ringgit and low valuations.

“Investors will watch out for countries with twin deficit but fortunately, Malaysia has a current account surplus, which will continue as the government has put on hold mega projects,” he said.

He said the rating agencies are still on hold on Malaysia due to the strong economy, with potential for a rating upgrade next year.

MIDF: FBM KLCI to rebound to 1,830 by end-2019

KUALA LUMPUR: MIDF Research expects the benchmark FTSE Bursa Malaysia KLCI (FBM KLCI) to rebound to 1,830 by end-2019, supported by a recovery in corporate earnings.

Head of strategy and quantitative analytics Syed Muhammed Kifni Syed Kamaruddin said corporate earnings for 2019 are expected to grow by 5.8% as compared with 1.96% anticipated for this year.

“We also foresee that there are opportunities for investors to enter the market now, as the current composite index (CI) level is about 150 basis points lower than what we projected by end of 2019,” he told a market outlook media briefing today.

Syed Muhammed said the market price-earnings ratio valuation is also expected to improve to 16.2% from the current level of 15.8%.

With that, along with no further escalation in trade tensions between the United States and China, he said the 1,830 level target should be achievable.

However, he opined that Bursa Malaysia would be trading range-bound next year with profit-taking and performance-chasing activities taking place.

As for end-2018, he said the CI support level would be at 1,600, but it would trade higher should window dressing activities kick in.

On the ringgit, he foresees the local unit to mildly strengthen to RM4 against the US dollar by end-2019 from the current level of about RM4.18.

“This would be backed by the improvement in both crude oil and crude palm oil (CPO) prices,” he said.

He said benchmark Brent Crude was anticipated to trade higher at US$75 per barrel next year from the current level of about US$60 per barrel, following the Organisation of the Petroleum Exporting Countries agreement on a production cut, with the CPO to average at RM2,200 per tonne from the current RM1,960 per tonne.

“Subsequently, this will lead to the return of foreign funds into our markets, as we have seen outflow amounting to RM11 billion as of last week for this year,” he said.

Last year, the local equity market recorded more than RM10 billion of foreign fund inflow.

Commenting on the outlook for fund flows, head of research Mohd Redza Abdul Rahman said it would still boil down to corporate earnings.

“If the earnings are positive, share prices will follow and entice the foreign investors to come in,” he said, adding that Bursa Malaysia is still defensive compared with regional peers.

“This would help investors find shelter here amid the uncertainty,” he added.

According to MIDF Research’s statistics, the KLCI’s gains slid 6.8% between January and last Friday, while the MSCI Asia Pacific Ex-Japan Index fell 15.4% and the MSCI Emerging Markets Index retreated 16% in the same period.

Ringgit ends higher on jitters over US dollar

KUALA LUMPUR, Dec 18 — The ringgit closed higher against the US dollar prompted by greenback's weakness, amid the sell-off in US equities, dealers said. At 6pm, the local note traded at 4.1750/1800 against the US dollar compared with…

Asia stocks slide as global growth worries deepen

TOKYO, Dec 18 ― Asian share markets slumped today as heightened concerns about a slowing global economy sent Wall Street stocks skidding to their lowest levels in more than a year. MSCI's broadest index of Asia-Pacific shares outside Japan shed…

IMF says China-US trade row affecting Asian business confidence, investment

TOKYO: Trade frictions between China and the United States are already affecting business confidence and investment in Asia, a senior International Monetary Fund (IMF) official said, warning that the fund could further cut its global growth forecasts in January.

Changyong Rhee, director of the IMF’s Asia and Pacific Department, said Japan and South Korea could be among countries in the region hit hardest by the trade war given their reliance on exports to China.

“Investment is much weaker than expected. My interpretation is that the confidence channel is already affecting the global economy, particularly Asian economies,” Rhee told Reuters.

“We see global growth a little bit slower than we forecast in October,” he said today.

Citing the potential fallout from the Sino-US trade war, the IMF cut its global growth forecast in October to 3.7% for both 2018 and 2019, down from 3.9% projected in July.

It expects Asia’s economic growth to slow to 5.4% next year from 5.6% projected this year.

Rhee said there was a chance the IMF could cut further its growth forecasts when it reviews them in January, given signs of slowdown not just in Asia but in Europe and the United States.

“Uncertainty is so large … uncertainty means you have upside potential as well as downside risk. At this moment, we believe the downside risk is a little bit higher,” he said.

On China, Rhee said it was not resorting to big-scale stimulus despite growing external headwinds, given the need to deal with long-term challenges such as curbing excess debt.

“They aren’t accelerating (stimulus) yet but taking the foot from the brake for the time being. But that doesn’t exclude the possibility that if the trade tension escalates, if growth goes down, they are ready to use stimulus,” he said.

“What we’re concerned and what we’re advising them is that the medium-term goals such as deleveraging are still important for financial stability,” Rhee added.

“So when they actually try to use stimulus, we hope they can use more fiscal policy rather than credit expansion.”

Ringgit closes higher as demand for US dollar falls

KUALA LUMPUR, Dec 17 — The ringgit closed stronger against the US dollar today on bearish outlook on the greenback, a dealer said. At 6pm, the local note traded at 4.1790/1830 against the US dollar compared with…

Asian shares on defensive on mounting signs of a global slowdown

TOKYO, Dec 17 — Asian share markets started the week on a cautious footing today after weak economic data from China and Europe added to evidence of cooling global growth and reinforced anxiety over the impact of international trade frictions on…

Foreign funds inflow to improve in coming weeks, says analyst

KUALA LUMPUR: Foreign fund inflow is expected to improve in the upcoming weeks as evident by the inflow of RM123.3 million in foreign funds on Thursday, the highest inflow since November 8. Inter-Pacific Securities Sdn Bhd head of Research Pong Teng Siew said the heavy inflow also helped to pare down the week’s net foreign […]