FBM KLCI Top 20 Gainers
(Cut-off date – Dec 22, 2015)
IN a year which saw the ringgit depreciate by some 18%, exporters benefited while consumer stocks stood out for their resilience in earnings. The top performer for the FBM KLCI was rubber maker Top Glove Bhd. The company reported a 164% jump in its net profit to RM128.34mil in the first quarter ended Nov 30, 2015 from RM48.68mil a year ago on the back of a strong US dollar and lower raw material prices.
Meanwhile, the only oil and gas player, albeit one in the downstream to make the list is Petronas Dagangan Bhd (PetDag). Its earnings have caught most analysts and consensus estimates by surprise, and some have revised upward the retailer’s earnings and expect margins to improve, going forward.
PetDag’s net profit increased by 36.46% to RM218.88mil for the third quarter ended Sept 30, 2015 against RM160.4mil in the previous corresponding period, mainly supported by higher margins from the retail and commercial segments.
Technology companies such as Malaysian Pacific Industries Bhd and Globetronics Technology Bhd have been benefiting from producing “smart technology” related products as well as conducting their sales in US dollar.
The consumers segment which rose included Panasonics Malaysia Bhd, Dutch Lady Milk Industries Bhd, Ajinonoto (M) Bhd and Nestle (M) Bhd.
Building materials and plastics and packaging companies such as Ajiya Bhd, Ge-Shen Corp Bhd, Scientex Bhd and Can-One Bhd have also benefited from enjoying higher margins in their earnings.
FBM KLCI Top 20 Losers
(Cut-off date – Dec 22, 2015)
The Malaysian banking sector was the clear loser with four banks making it into the list for worst performers of the year.
Investors sold down shares in Hong Leong Capital Bhd, AmBank Bhd, Alliance Financial Group Bhd and CIMB Bank Bhd on a myriad of reasons which included rising credit costs adversely affecting bank’s profitability and return on assets.
Rising credit costs have adversely affected banks’ profitability and return on assets has fallen to a three-year low.
The Malaysian banking sector is likely to face further pressure on earnings and asset quality next year due to slower GDP growth, persistently low commodity prices, currency depreciation and lacklustre domestic sentiment.
Among oil and gas companies, Dayang Enterprise Holdings Bhd and UMW Oil and Gas Bhd were major losers, considering crude oil prices are at 11-year lows. Brent is now trading at about US$36 and most are resigned to the fact that these prices will stay at these levels for a long time to come.
Low cost carier AirAsia Bhd was among top losers after it came under attack from a Hong Kong-based research firm and speculation that its major shareholder Tan Sri Tony Fernandes and his business partner Datuk Kamarudin Meranun were looking to take the airline private.
Both Fernandes and Kamarudin hold 19% in AirAsia.
Meanwhile cement players such as Lafarge Malaysia Bhd and Tasek Corp Bhd have been having it tough due to intensifying competition and high prodution cost in the industry.
Genting Bhd has been affected due to the higher provisionings by Genting Singapore, to which Genting has a 52.7% stake.
It is estimated that GENS will contribute about 40% to Genting group’s earnings for the financial year ending Dec 31, 2015 and 2016.
World Index Top 20 Gainers
(Cut-off date – Dec 22, 2015)
What is clear among the outperformers of world stock markets are that many are those with troubled economies.
An example is the No. 1 top performer – Venezuela. While it may appear that the Venezuelan stock market is up nearly 300% and has outperformed, its economy hardly performed in the same way.
The Venezuelan currency, the bolivar has weakened tremendously on the black market, with one bolivar equal to 0.16 US dollar.
The past year’s plunge in oil prices has tremendously pressured the economy, with the government printing Bolivars to plug the budget deficit and as a result depreciating the currency to one of its lowest levels.
The jump in the stocks actually show how desperate Venezuelans are in trying their best to preserve some value amid the drop in currency and surging consumer prices.
Meanwhile, despite more attention on the wild swings of the China bourses since June this year, they have since been rallying.
China’s major stock indexes have been rising on new signs that cash-rich insurers were on the lookout to buybstakes in blue chip companies.
The same can be said for Argentina. Known more as an economic wasteland and high corruption, the market has been one of the hottest performing market not because of great economic fundamentals, but simply because investors were anticipating a change in leadership for its November presidential elections.
Investors got what they wanted when Muricio Macri, known as an economic reformer, became the newly sworn-in president of Argentina.
Hungary is another troubled economy which saw its stock market rise 41%. This is mainly on the back of its Prime Minister Viktor Orban, launching unusual tax proposals and reforms.
One policy included canceling some Hungarian mortgage debt that was denominated in Swiss francs, and owed to Swiss banks. Consumer sentiment has also risen, perhaps because of the debt relief.
World Index Top 20 Losers
(Cut-off date – Dec 22, 2015)
The fall in oil prices, debt defaults, political conflicts and military rule - these are the potpouri of factors that capital markets loathe and is a common thread among the worst performing markets of 2015.
Coming up tops is the stock market of Ukraine - no surprise for the conflict that has begun since last March.
Russia seized Crimea from Ukraine in March 2014 in a military operation strongly denounced by the West. Since then, economic sanctions on Moscow has been imposed by many Western countries.
Oil-dependent countries such as Nigeria, Brazil, Indonesia, UAE Dubai and Colombia were big losers as concerns mounted on how basement level crude oil prices would affect their finances.
Meanwhile, Greece’s debt crisis which started in 2010, almost reached breaking point this year with massive cash withdrawals by account holders in the first half of the year.
Most international banks and foreign investors have sold their Greek bonds and other holdings.
After several months of negotiations between Greece and its creditors, Greece received its third bailout in five years.
Thailand too was a major loser, having been rocked by political instability and finally culminating in last year’s military coup. When former general Prayuth Chan-ocha seized power on May 22, businesses have since suffered. Following the military coup, disappointing data had emerged, showing weak exports, muted public and private spending, falling prices in farm goods and domestic consumption.
Singapore is another poor performer following the rout in raw material prices. Property prices decline and bad debts increase. With overall growth slowing, this poses problems for banks and commodity related companies.
Currencies
Top gainers and losers
(Cut-off date – Dec 22, 2015)
With the anticipation of the start of the US tightening monetary policy dominating global sentiment this year, it wasn’t surprising that nearly every emerging market currency depreciated as assets found new homes in the US.
On Dec 17, the Fed raised its key interest rate from a range of 0% to 0.25% to a range of 0.25% to 0.5%, signalling that the economic health of the world’s largest economy had improved since the days of the 2007/2008 financial and subprime crises.
The Fed has indicated that depending on the US economy, it will look at raising interest rates by a percentage each year for the next three years.
It is on the back of this that emerging market currencies are likely to depreciate even further this year. Thus even among the best performing currencies, only the Hong Kong dollar appreciated while every other currency depreciated.
The slight appreciation of the Hong Kong dollar is simply because it is pegged to the US dollar. It has not moved against the greenback for the past 32 years.
China’s central bank shocked global markets this year when it devalued its currency twice largely as a bid to boost the competitiveness of its exports.
Meanwhile, the International Monetary Fund (IMF) has included the yuan in an exclusive group of currencies that make up the basket of the IMF’s Special Drawing Rights.
With crude oil prices going into free fall last year, not surprisingly many of the worst performing currencies were the oil and commodity dependent countries such as Malaysia, Mexico, Colombia, Brazil and Russia.
Russia’s woes have been aplenty since being hit by a series of economic sanctions by many Western governments following its military intervention in Ukraine. This has effectively halved the currency’s value since the Ukraine crisis began in early 2014.
Volatility has been exacerbated by a decision in November 2014 to switch the rouble to a free-floating currency.
http://www.thestar.com.my/business/business-news/2016/01/02/the-stock-market-in-2015/?style=biz
