ASEAN KEY DESTINATIONS
All markets went up todayAseanAffairs
In the foreign exchange markets, the US dollar was buoyed by bin Laden's death as some expect terrorist risks may ease. This is at the expense of gold price. According to Dow Jones Newswire, spot gold is at US$1,555.50 per ounce, down $10.20 from the previous closing in New York.
Indonesian stocks may hit new high
The stock market may hit a new record high this week as April inflation numbers, to be announced today, are likely to cool following a slide in food prices, analysts say.
The benchmark Jakarta Composite Index (JCI) reached an all time high of 3,819.62 on the last trading day of last week as investors gained confidence in Indonesia after slowing inflation for the past two months.
“The downward trend in inflation is very good in the eyes of investors. It will positively affect the Indonesian stock market,” MNC Securities head of research Edwin Sebayang told The Jakarta Post on Sunday. The positive inflation sentiment may continue for one or two days, he added.
The central bank predicted the consumer price index to fall 0.15 to 0.25 percent on a monthly basis, with inflation slowing to 6.3 to 6.4 percent on an annual basis, governor Darmin Nasution said.
BI’s recent policy that provides room for the currency to appreciate has helped ease the surge in prices of imported goods, which are used as material for domestic products, analysts said.
“BI’s strategy has been proven effective to ease inflation from the import side,” Edwin said.
The rupiah touched a seven-year high of Rp 8,574 per dollar on Friday, gaining 4.7 percent so far this year. The rupiah increased 4.4 percent throughout all of last year.
Stock and bond markets investors had previously doubted BI’s credibility in keeping inflation in check after prices soared to a 20-month high of 6.96 percent in 2010, higher than the central bank’s 6 percent target.
The Indonesian stock market saw heavy sell-offs earlier this year over inflationary concerns, with approximately Rp 4 trillion in foreign funds flowing out of the country. The JCI lost nearly 10 percent during the massive sell-offs but has rebounded to book record highs recently.
Nico Omer Jonckheere, vice president of research and analysis at Valbury Asia Futures, said that inflationary pressures may no longer threaten Indonesia’s stock market, as the macroeconomic fundamentals remain promising.
Foreigners hold a 60 percent stock in the market, making market movements heavily reliant on external factors, analysts say.
Malaysian shares to trend higher
Share prices on Bursa Malaysia are likely to trend higher this week on bargain hunting with external factors swaying the market, dealers said.
Affin Investment Bank's head of retail research, Dr Nazri Khan, told Bernama that the market was going into a tough phase right now amid a mixed package of news and data.
"On one end, investors' confidence are boosted by stellar financial results by US corporates but concerns are still weighing on the sustainability of the US economic recovery, the liquidity of the greenback and rising commodity prices triggering global inflation worries," he said.
He expected the benchmark FTSE Bursa Malaysia KLCI (FBM KLCI) to move between 1,540 to 1,550 on external leads amid the absence of catalyst on the local front coupled with a holiday shortened week.
Bursa Malaysia will be closed on Monday in lieu of Labour Day falling on Sunday.
Nazri said the real driver of the market would still be the strengthening ringgit.
At 5pm yesterday, the ringgit continued its rally against the greenback to close at another new 13-year high of 2.9600/9620, against 2.9647/9667 on Thursday.
He said Bank Negara Malaysia was expected to raise the overnight policy rate by 25 basis points after its monetary policy meeting next week, and the market had taken that into account.
"Besides that, the signing of bilateral agreements between China-Malaysia in key sectors like energy, infrastructure and communication would revitalise the market further," he added.
Meanwhile, Jupiter Securities head of research Pong Teng Siew said the benchmark index might consolidate further with the range of 1,515 to 1,530 eyed.
"I think, we are at the tail end of the bull market, and from now on investors need to be specific in what they invest to reap returns.
"There is still money to be made, but they need to study carefully before investing as stock picking is very crucial in this stage," he said.
This week, the market staged a mini rally for four days consecutively before paring gains on Friday.
On a weekly basis, the key index increased by 12.2 points to 1,534.95 from 1,522.75 the previous Friday.
The Finance Index gained 106.43 points to 14,039.16, the Industrial Index rose 35.29 points to 2,792.37 points and the Plantation Index inched up 1.43 points to 7,589.85.
The FTSE Bursa Malaysia Emas Index increased to 10,576.09 from 10,518.13 but the FTSE Bursa Malaysia Ace Index eased to 4,387.50 from 4,408.25.
The weekly volume declined to 5.007 billion shares worth RM4.901 billion from 5.873 billion shares worth RM7.408 billion.
The Main Market turnover declined to 3.705 billion shares valued at RM6.139 billion from 4.056 billion shares valued at RM5.316 billion.
Volume on the ACE Market decreased to 974.502 million shares worth RM182.796 million from 1.390 billion shares worth RM279.745 million previously.
Warrants fell to 310.393 million units worth RM61.455 million from 417.454 million units valued at RM87.691 million.
Philippine market to test 4,400
Philippine share prices are expected to move upward, as the main index tests the 4,400 level, driven by corporate earnings reports and favorable macroeconomic data.
“Chart wise, the week’s close at 4,319.5 continues to support a near-term rise towards the 4,400 levels,” Banco De Oro Unibank Inc. (BDO) said in a research note.
“Corporate earnings, positive macros and last week’s momentum may spur the index towards the 4,370 to 4,400 range in the next five sessions,” said Jun Calaycay of Accord Capital Equities Corp.
But a failure to clear the said level could call for a re-test of the 4,200 level, BDO said. Likely to weigh heavily on the market are major domestic developments such as the April inflation data and the Bangko Sentral ng Pilipinas policy meeting.