INVESTORS were generally cautious during the trading week of May 30 to June 3 as the last of the earnings announcements came in, with sideways trading prevailing in the market.
Among companies that announced their quarter-ended Mar 31 financial results in the first two days of the week were Maxis Bhd, Axiata Group Bhd, Puncak Niaga Holdings Bhd, MMC Corp Bhd, Tradewinds (M) Bhd, Mamee-Double Decker (M) Bhd, Malaysia Airports Holdings Bhd, Plus Expressways Bhd and Time Dotcom Bhd.
There was selective trading interest based on news flow, largely focused on stocks such as Tenaga Nasional Bhd, Genting Bhd, Tradewinds and Malayan Flour Mills Bhd.
Malayan Banking Bhd and CIMB Group Holdings Bhd were in the news after both said they were looking to acquire RHB Capital Bhd, the country's fourth largest banking group by assets.
Overall, analysts said the mood was dampened and expect cautious trading to continue next week as corporate results was largely disappointing with few surprises.
Due to the less-than-stellar earnings, analysts have started to relook and even trim their expectations for earnings growth this year to reflect the earnings downgrades of the January to March quarter.
HwangDBS Vickers Research analyst Goh Yin Foo said the trimming of earnings of companies under the house's coverage to 18% from 20% in the previous quarter could push up the market price/earnings valuation to 15 times plus for this year.
He said this would make it just slightly above the historical average, which would be neither cheap nor expensive.
CIMB Investment Bank Bhd's research head Terence Wong said earnings revisions have shown a definite downside bias with 16% of the companies under the house's coverage beating estimates, which was worst than the 20% in the last reporting season.
“We think that the downgrades are coming closer to an end as expectations have become more realistic and the impact of Economic Transformation Programme should start to kick in gradually,” he added.
Besides earnings, news at home was overshadowed by concerns over the health of the global economy. A string of weaker macroeconomic data including jobs outlook and housing in the United States have been disappointing in recent weeks.
As this issue goes to print, US jobs data for the month of May, which economists expect to be weaker, might fuel worries of slower growth going forward.
Coupled with rising inflationary pressure as subsidy rationalisation continues apace, policymakers would now have their hands full trying to balance domestic demand-supported growth with price increases.
Although largely expected, the announcement in the hike of the electricity tariff and the rise in gas prices would impact heavy users particularly in manufacturing.
Economists expect for there to be knock-on effects as businesses pass the increased costs to end-users.
External trade figures released by the Statistics Department yesterday showed that the manufacturing sector would not only have to contend with cost pressures but also with choppy demand from abroad.
While April's trade data showed exports grew 11.1% year-on-year and imports by 9.4%, on a month-on-month basis exports decreased 6.6% with imports 7.4% lower while total trade fell 7%.
The week ended with some hope as International Monetary Fund and European Union officials have completed their assessment of further austerity measures and asset sales by Greece, which is at the centre of the euro-zone crisis.
Meanwhile, OSK Research associate director Chris Eng said in a strategy report that this month, which the house had expected to be quiet in anticipation of four initial public offerings in June and July, would see the focus on banks.
“Investors will naturally want to buy up RHB Capital and potentially identify which of the other banks could also be an acquisition target after RHB Capital and EON Capital Bhd have been targeted,” he pointed out.
Among companies that announced their quarter-ended Mar 31 financial results in the first two days of the week were Maxis Bhd, Axiata Group Bhd, Puncak Niaga Holdings Bhd, MMC Corp Bhd, Tradewinds (M) Bhd, Mamee-Double Decker (M) Bhd, Malaysia Airports Holdings Bhd, Plus Expressways Bhd and Time Dotcom Bhd.
There was selective trading interest based on news flow, largely focused on stocks such as Tenaga Nasional Bhd, Genting Bhd, Tradewinds and Malayan Flour Mills Bhd.
Malayan Banking Bhd and CIMB Group Holdings Bhd were in the news after both said they were looking to acquire RHB Capital Bhd, the country's fourth largest banking group by assets.
Overall, analysts said the mood was dampened and expect cautious trading to continue next week as corporate results was largely disappointing with few surprises.
Due to the less-than-stellar earnings, analysts have started to relook and even trim their expectations for earnings growth this year to reflect the earnings downgrades of the January to March quarter.
HwangDBS Vickers Research analyst Goh Yin Foo said the trimming of earnings of companies under the house's coverage to 18% from 20% in the previous quarter could push up the market price/earnings valuation to 15 times plus for this year.
He said this would make it just slightly above the historical average, which would be neither cheap nor expensive.
CIMB Investment Bank Bhd's research head Terence Wong said earnings revisions have shown a definite downside bias with 16% of the companies under the house's coverage beating estimates, which was worst than the 20% in the last reporting season.
“We think that the downgrades are coming closer to an end as expectations have become more realistic and the impact of Economic Transformation Programme should start to kick in gradually,” he added.
Besides earnings, news at home was overshadowed by concerns over the health of the global economy. A string of weaker macroeconomic data including jobs outlook and housing in the United States have been disappointing in recent weeks.
As this issue goes to print, US jobs data for the month of May, which economists expect to be weaker, might fuel worries of slower growth going forward.
Coupled with rising inflationary pressure as subsidy rationalisation continues apace, policymakers would now have their hands full trying to balance domestic demand-supported growth with price increases.
Although largely expected, the announcement in the hike of the electricity tariff and the rise in gas prices would impact heavy users particularly in manufacturing.
Economists expect for there to be knock-on effects as businesses pass the increased costs to end-users.
External trade figures released by the Statistics Department yesterday showed that the manufacturing sector would not only have to contend with cost pressures but also with choppy demand from abroad.
While April's trade data showed exports grew 11.1% year-on-year and imports by 9.4%, on a month-on-month basis exports decreased 6.6% with imports 7.4% lower while total trade fell 7%.
The week ended with some hope as International Monetary Fund and European Union officials have completed their assessment of further austerity measures and asset sales by Greece, which is at the centre of the euro-zone crisis.
Meanwhile, OSK Research associate director Chris Eng said in a strategy report that this month, which the house had expected to be quiet in anticipation of four initial public offerings in June and July, would see the focus on banks.
“Investors will naturally want to buy up RHB Capital and potentially identify which of the other banks could also be an acquisition target after RHB Capital and EON Capital Bhd have been targeted,” he pointed out.
No comments:
Post a Comment