TRADING in global equities continued to be erratic over the past one week. Sentiment was largely dictated by daily developments while longer-term concerns, such as the debt crisis in Europe, weighed on investor appetite for risks.
Recent data out of the US indicated somewhat patchy improvement in the country's jobs market. High unemployment rate is expected to keep a lid on consumer spending, which accounts for two-thirds of its economy.
Similarly, investors are still uncertain of the extent of the fallout from the sovereign debt crisis in Europe on the rest of the world. Fiscal tightening over the next year or two, at least, will damp export demand for many Asian countries, including China.
Whilst China's exports continued to grow at a blistering 48.5% pace in May, there are also indications of a slowdown in industrial production. Rising inflation may also tip the government's hand in further policy tightening.
Investors are likely to stay skittish on the back of prevailing uncertainties. Trading interest over the next few weeks may also be affected by distraction from the FIFA World Cup.
Bellwether indices in the region ended the week on a mixed note, with the markets in Hong Kong and China finishing in mildly positive territory while Japan and Singapore ended slightly lower. On the home front, the FBM KLCI was flat for the week, closing at 1,294.7 points. Daily on-market volume slipped further to less than 576 million shares, on average.
Stocks in our model portfolio fared comparatively well against the benchmark index. Our basket of 17 stocks gained 2.31% led by strong performances from My EG Services and Faber Group. Including our large cash reserves (for which no interest is imputed), the total portfolio value was up by roughly 1.75% to RM577,120.
Last week's gains lifted our model portfolio's cumulative returns since inception to 260.7% on our initial capital of just RM160,000. Our total profits are very substantial at RM417,120, of which RM239,812 has already been realised from earlier sales, and the rest are paper gains.
By comparison, the FBM KLCI was up by about 100.2% over the same period, even though it has been less representative of the broader market's performance. Plus, our portfolio holds a significant amount of non-interest yielding cash at all times for prudence's sake.
Most of the stocks in our portfolio ended higher last week with four stocks closing in the red while three were unchanged. Shares for Faber (+12.4%) and My EG Services (+15.8%) were the top performers while Green Packet lost a further 5.4% to 87 sen. Nevertheless, we remain upbeat that the WiMAX broadband service provider will achieve breakeven at the operating level later this year, which should bolster investor sentiment for the stock.
We are keeping our portfolio unchanged for the moment and will monitor developments for cues on the market's outlook going forward. ''
Note: This report is brought to you by Asia Analytica Sdn Bhd, a licensed investment adviser. Please exercise your own judgment or seek professional advice for your specific investment needs. We are not responsible for your investment decisions. Our shareholders, directors and employees may have positions in any of the stocks mentioned.
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