Pegging or not?

People always have the view that FBM KLCI is pegging to the US market. No matter the overnight Wall Street slips or rises, we will blindly follow the footstep. Somehow, I think that the current market condition is too fragile and thus, this theory is temporary not applicable. So where are we now? I will leave the answer for you to figure out!

29 November 2010

Indeed, FBM KLCI did follow the overnight footstep in the early morning and plunged 17.39 points to 1,474.66. It was then staged a V-shaped rebound towards 1,484 level and subsequently climbed at a constant pace towards previous close. In the last 5 minutes, FBM KLCI jumped 3.9 points and ended the day by reversing the red into black at 1,495.95 on the back of the rescue plan for Ireland.

Petronas Chemical (PCHEM) has replaced BJTOTO in the FBM KLCI. Its traded volume of the day was 2 digits more compared with all the blue chips. Despite higher liquidity, the change in absolute term was equivalent to SIME, 9 sen. Top gainers were PCHEM, SIME and CIMB whilst top losers were GENM, GENTING and PPB.

Discussion on the issue of Korea Peninsular

South Korea announced earlier that it would conduct an artillery drill on the island, where the previous attack took place by North Korea. It was then cancelled without explanation. It could be a brilliant decision or I should say could be a good ethic that everyone should learn for world peace. If another confrontation between the two parties is being raised up again, the global market may experience another shoe to fall. Nobody can imagine how serious will the consequences of the next artillery test be. Thus, we definitely do not afford to give it a try or to have a war in the current market condition, where the US$113 billion bailout package for Ireland failed. Based on the current financial position, I believe US would not like it as well.

Back to the story, the whole point of the last test-firing by North Korea was all about the “Northern Limit Line”. What about that line? According to the Wall Street Journal, it says "North Korea objects to the line chiefly because it forces cargo and fishing vessels on its southwestern coast to take lengthy routes to international shipping lanes and open water." Will it get to change the maritime border? We will have to wait and see.

30 November 2010

Regional markets hit by the failure of Ireland rescue.
Nikkei 225 hit by the lower industrial production and higher jobless rate. Industrial Production rate m-o-m dropped 1.8% from September whilst jobless rate increased from 5% in September to 5.1%.
FBM KLCI may bias downwards due to the failure of Ireland rescue and the overnight losses.

ALARM

• Malaysia Money supply will be released today.
• Malaysia trade balance will be released tomorrow.