Equities Weekly: Equity Markets In The Black

0

Equity markets around the world had a mixed performance over the week ended August 15, 2014, with the MSCI AC World Equity index increasing by 0.11 per cent. The Japanese equity market (represented by the Nikkei 225 index) was the only developed market in the black (in ringgit terms), posting a gain of 1.74 per cent over the week. Both US and European equity markets experienced partial declines due to the appreciation of the romggot against their respective currencies, with the S&P 500 index declining by 0.22 per cent and the Stoxx 600 Index declining by 0.18 per cent over the week.

Emerging markets on aggregate outperformed their developed peers over the week, with the MSCI Emerging Markets index posting a 2.32 per cent gain, while Asian markets (as represented by the MSCI Asia ex Japan index) posted an increase of 1.12 per cent. East Asian equity markets all rebounded from the previous week, with the stock markets of South Korea (KOSPI index), Hong Kong (Hang Seng index) and Taiwan (TWSE index) recording gains of 1.83 per cent, 1.12 per cent and 0.06 per cent respectively over the week. The local Chinese equity market (using the Shanghai Composite index) inched up marginally by 0.05 per cent, while the HSML 100 index increased by 1.25 per cent over the week. Southeast Asian countries followed suit, with Malaysia and Thailand recording increases of 1.33 and 1.09 per cent over the week. In contrast, the Lion City (Singapore) was the only Asian market in the red, declining marginally by 0.18 per cent as the ringgit appreciated against the Singapore dollar by 1.08 per cent.

Russia was the top performing equity market under our coverage over the week, with the RTSI$ index rallying by 3.78 per cent on better than expected economic data, while the Brazilian equity market was the second best performer, with the Bovespa index posting a gain of 2.28 per cent over the week.

 

Malaysia: June’s industrial production beats estimates

Malaysia’s industrial production posted a better than expected seven per cent year-on-year (y-o-y) increase in June 2014, the highest increase registered in the past 11 months, beating consensus expectations of five per cent y-o-y gain. The latest reading was also above the downward revised 5.9 per cent y-o-y gain in the preceding month. The strong growth in industrial production was mainly contributed by the robust expansion of manufacturing output with a 9.1 per cent y-o-y increase, led by an increased production in transport equipment and electrical and electronic products. With the business condition index (BCI) surging to 113 in the second quarter of 2014 (2Q14) from a reading of 103.1 in previous quarter, coupled with sustainable exports in recent months, industrial output could be expected to remain strong moving forward.

 

Europe: 2Q14 GDP for Germany, France and Italy worse than expected, German sentiment tumbles

Recent economic data from Europe showed that economic growth in the second quarter for major European countries slowed from 1Q14. Germany’s economy grew by 1.2 per cent y-o-y in 2Q14, missing consensus forecasts of a 1.4 per cent y-o-y growth. On a quarter-on-quarter basis, the German economy actually contracted by 0.2 per cent. The French economy also slowed from the previous quarter like its German neighbour, growing by 0.1 per cent y-o-y in 2Q (down from a previous 0.7 per cent y-o-y increase) and recording zero per cent growth on a quarter-on-quarter basis. Meanwhile, Italy entered a technical recession, with its economy contracting by 0.3 per cent y-o-y (-0.2 per cent quarter-on-quarter). Spain was the only major European nation to deliver a positive surprise, with its economy growing by 1.2 per cent y-o-y in 2Q 14, up from a prior 0.5 per cent y-o-y growth with the positive effects of reforms in the economy finally starting to bear fruit.

To read more on activities in the market, log on to www.fundsupermart.com.my