The Star Online: Business
The Star Online: Business |
| Posted: 26 Aug 2011 04:54 PM PDT Global foreign exchange market WITH no major economic data scheduled for release this week, investors are focused on the Federal Reserve's annual summit in Jackson Hole. At last year's summit, Federal Reserve chairman Ben Bernanke outlined the requirements for further action by the central bank, paving the way to QE2, which was announced 3 months later. The lack of meaningful growth over the past year has put the Fed back in the spotlight with the world watching closely for hints at QE3. The US dollar has been treading water for the past few days and we expect this tight range to remain in place until Bernanke speaks on Friday. The US dollar index gained 0.02% to 74.119 levels. The euro held up remarkably well in the face of further disappointing data from eurozone this week. Even with the release of weaker-than-expected German IFO index which fell more than expected in August to 108.7 from 112.9 in July and eurozone industrial orders dropped 0.7% month-on-month and 11.1% year-on-year in June, persistent demand kept the euro firm throughout the week. During the week the euro gained 0.2% to 1.4411. On the other hand, the British pound slipped 1.03% on stop-hunting (cross-related) and dovish comments from Bank of England (BOE)'s monetary policy committee member who said Britain faced the risk of sliding into recession and BOE's growth forecast for 2011 and 2012 may be too optimistic. Japan's rating was cut by Moody's from Aa2 to Aa3, with a stable outlook. The impact of the sovereign downgrade together with negative rating actions on most Japanese banks was short-lived for the US dollar. However, the US dollar/yen posted its highest daily close in weeks as the yen weakened after Japanese officials unveiled a new US$100bil fund designed to curb the currency's persistent strength. This facility will use dollar funds in the forex reserves to facilitate acquisition of foreign firms by Japanese firms. The US dollar/yen pair finished the week 1.24% higher at 77.30. The Australian dollar showed positive upside strength following its central bank's Governor Glenn Stevens' comments. Glenn Stevens mentioned the difficult time the United States was having in finding a way to avoid a major fiscal contraction. This prompted the Australian dollar to edge higher by 0.55% against the greenback to 1.0484 at the point of writing. Asian currencies were up only very marginally against the US dollar this week. Asian currencies behaviour suggests that caution in Asian forex persists, and that if anything, the sensitivity to downside risk is quite high. The Bloomberg-JPMorgan Asia Dollar index traded almost unchanged for the week at 119.05. The ringgit maintained losses after a Government report showed the surplus in nation's current-account balance narrowed to RM23.4bil in the second quarter from RM14.8bil in the previous corresponding quarter. The ringgit declined 0.33% during the week, trading at 2.9900-levels. Bank of Thailand raised the benchmark interest rate by 25 bps to 3.50%, nudging it up for a seventh consecutive rate-setting session to quell rising inflationary pressures in the economy. Inflationary pressures continue to creep higher in Asian economies. Singapore CPI for July came in higher than expected at 5.4%, and is the highest since January. Separately, China's August HSBC flash manufacturing PMI edged up to 49.8 from previous 49.2. Bernanke may leave markets wanting for more, which could see another surge in risk aversion and potentially could lead to a drop in equity markets and other risk assets and a strengthening of the US dollar on safe-haven flows. Prevalent risk aversion will maintain upside momentum for the US dollar/ringgit. As such, we expect US dollar/ringgit to trade within the range of 2.9700 to 3.0200. US treasuries (UST) market As of Thursday's close, UST yields retraced higher following better than expected US durable goods orders reported, paring some gains from recent rally. Benchmark UST five- and 10-year yields edged 9bps and 16 bps higher on w/w basis to close at 0.98% and 2.23% respectively. Short-dated two-year remained well anchored at 0.2% on the view; US interest rates will continue to remain low for an extended period until the first half of 2013. Malaysian bond market Amid a rather data light week on the local front, players were seen staying on the sideline ahead of the Raya holiday next week. Trading volume in local bonds generally thinned on speculation most investors adopted a wait-and-see approach ahead of this week's US Jackson Hole meeting. At press time, outcome from the meeting had yet to be finalised but most market players are expecting some form of stimulus to be announced by US policymakers to spur its economy, including potential reinvestments of maturing US Treasuries held to be skewed towards long-end safe havens, to help cap borrowing cost. This week benchmark Malaysia Government Securities yields generally traded ranged-bound with levels closing a tad higher as of Thursday's close, with the 3-, 5-, 7-, 10-, 15- and 20-year benchmarks aligned 1-4 bps higher at 3.17%, 3.39%, 3.55%, 3.64%, 3.92% and 4.05% respectively. Overall, RM9.9bil worth of trades was transacted with a daily average trading volume of RM2.5bil versus last week's daily average of RM4bil. In the private debt market, a total of RM1.9bil worth of trades was transacted with a daily average trade volume of RM471mil. The GG/AAA and AA segments contributed 32% and 57% of trades respectively with the remaining from the single-A segment. In the GG/AAA segment, notable transactions reported include Hyundai Capital bonds maturing 2011-13 and Pengurusan Air SPV bonds maturing 2018-21 with RM202mil and RM90mil in total done respectively. Hyundai Capital 2008-12 and 2011-13 ended 1-3 bps lower to close at 3.75% and 3.91% respectively, while Pengurusan Air SPV 2006-18 shed 15 bps to close at 3.75%. Within the AA segment, trading in banking and power sector bonds saw greater prominence. The YTL Power 2008-18 garnered strong volume, with trades worth RM210mil, closing at 4.22%. This was followed by CIMB Bank 2008-21, which closed at 4.7% with RM150mil done. Likewise, banking bonds were seen preferred within the single-A segment led by RHB Bank 2003-19 which closed unchanged at 4.79% with RM60mil done. Ringgit interest rate swap (IRS) market The ringgit IRS rates rebounded during the week as markets were expecting measures to be announced by Fed to counter the slow growth in US. The rise of IRS rates further aided by the recovery of global equity markets. The rates ended the week by 4~15 bps. ● For enquiries, contact: fx-research@ambankgroup.com or bond-research@ambankgroup.com |
| Posted: 26 Aug 2011 04:53 PM PDT REVIEW: Bursa Malaysia started out the week on a soft platform, with the bellwether FBM Kuala Lumpur Composite Index (FBM KLCI) shedding a significant 6.65 points, or 0.45% to 1,477.33 in initial deals. Market sentiment was undermined by the frail US markets overnight, as fears of another recession in the US, combined with concerns related to Europe's debt crisis kept investors on the edge the previous Friday. An unspiring performance in Asian equities also fanned the downbeat note. In the absence of fresh buying incentives on the horizon, the local bourse retreated deeper into the red during the day, touching a low of 1,467.42 in the afternoon before paring slightly to settle at 1.472.16, down 11.82 points on Monday. After the recent beatings, overnight Dow eked out a gain of 37 points to 10.854.65 in dull trade the next day, as market players were reluctant to take big bets without any compelling leads in sight. Though crude oil prices jumped US$1.86 a barrel to US$84.12, trading was somewhat choppy. Like the regional trend, the local bourse treaded waters in sluggish business throughout the morning session, tracking the cautiously firmer Wall Street and commodity prices but in an unexpected move after the midday break, the momentum picked up steam, as a better-than-expected China August purchasing managers index boosted investors' confidence. On the back of improving market sentiment, quality issues led the rebound, driving the FBM KLCI up 10.21 points to 1,482.37 on Tuesday. Come Wednesday, the local market continued to mend in the morning session on spilled-over buying after Wall Street rallied some 322.11 points to 11,176.76 on speculation of more easing by the Federal Reserve to stimulate the struggling US economy. But sadly, the positive momentum swiftly petered out, as news about Moody's Investors Service downgrading Japan's government debt by one notch to AA3, prompted investors to move back to the sidelines. In a scenario where early buyers turned net sellers, Bursa succumbed to tremendous stress to reverse direction, ending down 13.22 points to 1,469.15 that day. Thereafter, sellers dominated the floor amid worries over the global economic outlook. Blue chips, especially the banking stocks bore the brunt of selling, dragging the key index down 4.41 points to 1.464.74 on Thursday and an extra 19.93 points to 1,444.81 yesterday. Statistics: Week-on-week, the major index lost 39.17 points, or 2.6% to 1,444.81 yesterday, against 1,483.98 on Aug 19. Turnover for the regular week amounted to 4.422 billion shares worth RM9.580bil, versus 5.068 billion units valued at RM8.932bil changed hands previously. Technical indicators: The oscillator per cent K and the oscillator per cent D of the daily slow-stochastic momentum index sustained the downward spiral during the week to settle at the 6% and 14% levels respectively yesterday. Similarly, the 14-day relative strength index deteriorated further to end at 22 points yesterday. Meanwhile, the daily moving average convergence/divergence (MACD) histogram resumed the negative expansion against the daily trigger line to stay bearish. Weekly indicators were not looking well, with the weekly MACD expanding negatively against the weekly signal line and the upward trend of the weekly slow-stochastic momentum index stalling. Outlook: Bursa retreated significantly on renewed liquidation pressure the past week, as a futile attempt to penetrate the 14-day simple moving average (SMA) brought out fresh fears of an extended correction going forward. The other contributing factor could be the long break ahead, because most investors clear position due to prevailing uncertainty and global equities experiencing great volatility. Bursa would be shut from the afternoon session on Monday and reopens on Friday, if Hari Raya falls on Tuesday. Anyway, we have seen a couple of breakdowns and negative crossings since the market peaked out on July 11 at an all-time high of 1,597.08. Apart from that, we now are worry of a possible "death cross" of the 50-day SMA against the 100-day SMA. Apparently, the gap between the two averages is only less than two points. If the crossing does come about, it would surely add more weights to equities. Then, the market will find it harder to come out of the rut. Technically, indicators are sending out oversold signal, implying the local bourse is likely to stage a relief recovery in the short-term, but the upside is likely to be limited, as other measurements remain negative. Support is pegged at the recent lows of 1,423.47, of which a clear breakdown would prompt us to alter our outlook from "neutral" to bearish. The lower stronger support is envisaged at the 1,396-1,400 points band, followed by the 1,350 points mark. Resistance is expected at 1,481 points, 1,500 points, 1,530 points and the next, at 1,540-1,550 points range. |
| Posted: 26 Aug 2011 04:53 PM PDT Bingsop's Fables: Little Morals for Big Business Author: Stanley Bing Publisher: Harper Business A middle-aged Mogul, whose hair had begun to turn rather sparse in inverse proportion to his girth, found himself pursuing two supermodels at the same time. One of them was obsessed with youth, which she was then on the point of losing. The other was obsessed with food, which she was not permitted to eat. The latter got her vicarious thrills by making sure the Mogul ingested all that she could not eat, while the former, terrified of going grey, removed every one she could find on him. Between them, he soon found himself fat, bald and alone. Using much illustrations, the author uses wit and insight in his white-collar fables passed down from generations since Greece was glorious and Rome was grand. How to Click with People: The secret to better relationships in business and in life Author: Rick Kirschner Publisher: Hyperion WITH some people, you just click. The connection is quick and easy. Communication flows. You can tell them anything and they just know what you mean. We think this connection is an instantaneous thing. Not so, says the author. These skills have to be learned and he relates how you can speak the same language as the other person you are taking to, whether emotional or intellectual. He also writes about our responses to others and highlights the obstacles that get in the way of how we connect with people. Leadership is Dead: How influence is reviving it Author: Jeremie Kubicek Publisher: Howard Books THE author is of the view that good leadership is all about relationships. In order to become trustworthy, one must first of all give trust. In order to be credible, one must not just be smart but be honest and show integrity. These qualities are important because in order to have opportunities, one must first of all pursue relationship ahead of monetary goals. In order to get, one has to first of all, give of oneself. |
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