The year 2012 has been an interesting one for the stock market in Malaysia. The stock markets have changed in a lot of ways over the years as investments rose and fell. Many different factors influenced the stock markets in Malaysia, from worldwide influences to local factors.
Here is an overview of the way that the stock markets in Malaysia have changed over the last year, with a month to month analysis of the stock performances.
At the beginning of January 2012, global investors were embracing risk and the stock market had one of the strongest opening months in history. The ringgit strengthened slightly at this time and the willingness for investors to embrace risk greatly increased, causing many investors to become interested in more diverse investments. These foreign investors were looking for assets which will hold the promise of an attractive yield, compared to the paltry 1-2% which is available from long-term government bonds in the UK, German, USA and Japanese stock markets.
The world stock markets continued their very strong opening all throughout February as well. However, Malaysia’s stock markets underperformed during this time compared to their global peers. The ringgit continued to strengthen and inflation eased further upwards.
Many Malaysian companies found themselves enjoying significant earnings in February, including KLK, Axiata, United Plantations, Masic, UEM Land, KPJ Healthcare and more. The attitude towards risk which was established in January continued throughout February as well. This improvement might have been encouraged by the temporary resolution of Europe’s government debt crisis.
Stock markets in Malaysia enjoyed another positive month this March. The aggressive attitude of the European Central Bank over the prior six months, as well as the resiliency of the U.S. economy, boosted the confidence that a severe decline in economic activity was not in the foreseeable future.
It could be possible that at this point investors are becoming more and more desensitised to the problems happening in Europe and understand the situation well enough to know that extreme risk aversion is not necessary.
After the last few months of gains, the stock markets in Malaysia pared back in April. The Central Banks kept up with their loose monetary policy settings as they had concerns about the potential effect of severe European fiscal austerity measures. The Malaysian stock markets sold off near the end of April, upon uncertainty and profit taking surrounding a public demonstration for clean elections on the 28th of April. However, improved corporate earnings from the USA and other robust grown figures from China helped to buffer against a more depressed outlook for the stock markets.
The stock markets throughout the world were subdued in May, but the Malaysian stock market bucked this trend when it came to local currency. Concerns about the impact of prolonged financial problems in Europe continued to dominate the global financial markets. Within the month, the Malaysian stock markets experienced a significant decline amid increased speculation that Greece might opt out of the Euro.
After the uninspiring performance in May, the stock markets rebounded in June. However, the Malaysian stock indices were slightly behind the global benchmarks after out-performing them the month before. The decisions made by the European summit to provide funds to Spanish banks have affected investments. However, amid the global uncertainties the Malaysian stock markets continued to climb high during June.
Stock market performance remained positive in July and there was a rebound in exports after two months of contraction in this area. There were also signs of improving manufacturing ability. However, economic growth was tempered by the uncertainty growing around overseas demand. It was the increased government spending just ahead of the general electron which supported the economy.
In the month of August, stock market performance remained positive. The Malaysian stock markets continued to climb higher as they were encouraged by a healthy 2nd quarter GDP growth of 5.4%. However, as external demand slows, the sustainability of current economic growth is in question.
When it comes to local currency, the Malaysian stock markets traded slightly higher in September. However, the high growth in this region of Asia is still being affected by the slower growth in the rest of the world. These growing global concerns are weighing on the market sentiment. As you can see, a lot of changes have occurred during 2012 in the Malaysian markets, bringing us to the current month of October and many financial possibilities in the near future.
Carlo Pandian is a finance graduate and online tutor on Intuit QuickBooks software. He loves writing about stock markets, small business tips and social media. When he’s not online, he plays his guitar and singing at the karaoke with his friends.