WORLD stock markets recorded a strong rebound in the first half of the year despite earlier concerns about the fallout of from war in Iraq and the Severe Acute Respiratory Syndrome (SARS) outbreak.
The KLSE Composite Index (CI) rose 7% over the six months, but the big gainers in Asia were Bangkok (29.5%), Manila (20%) and Jakarta (19%).
Markets in Europe, too, closed the first half higher, with Frankfurt's Dax up 11% at the end of June. London's FTSE closed 2.3% higher but Paris' CAC-40 rose a meagre 0.6%.
In New York, the Dow Jones Industrial Average finished the half-year up 7.7%, the S&P 500 was higher by almost 11%, but the biggest gain among the top three markets in the United States was seen in the Nasdaq, which rose 21%.
The run-up the US stock markets enjoyed during the second quarter was the best since the end of 1998. The broader S&P 500, which rose 14.9% during the second quarter, had its eighth best quarterly performance since World War II.
Analysts described the first half of the year as topsy-turvy, with the prospect of world stock markets floundering for yet another down year, given all the gloom flooding into equities during the first quarter.
But once the war in Iraq was over, markets in the United States and Europe rebounded with more conviction as investors sensed there were no real obstacles on the immediate horizon to economic growth resuming.
A number of markets in Asia, however, had to wait before participating in the rally as the SARS outbreak dampened optimism and kept market indices down. But once the prognosis on the outbreak turned positive, markets in the region started to catch up with their peers in other parts of the world.
By the end of June, Tokyo's Nikkei 225 was up 5.8% for the first half of the year. Hong Kong's Hang Seng rose 2.7% and Taipei's Weighted Index saw a gain of 9.4%.
Seoul's Kospi was up 6.6% but Australia's All Ordinaries added just 0.7% over the same period.
“There were a lot of feel-good factors that drove markets higher in the second quarter, and the momentum for global markets is still there,'' said OSK Research assistant general manager of research Pankaj Kumar.
The KLSE started to rally after the unveiling of the government's economic package on May 21, with property stocks getting an immediate lift from the measures announced.
The rally soon lifted the entire market, and by the time the second quarter ended, small cap stocks and second liners also recorded impressive gains over the six-month period.
Oil and gas stocks, as a group, put on a run not seen for a very long time.
The KLSE second board, which has been strong lately, outperformed the CI by rising 10.9% for the first six months of the year.
A number of the old plantation companies were the biggest gainers in value terms. Leading the pack were SUNGEI BAGAN RUBBER CO (M) BHD and Mentakab Rubber Co, which added RM12.75 and RM9 respectively to reach RM92.75 and RM42.5 by the end of June.
Air-conditioner manufacturer OYL Industries Bhd was the third largest gainer in value terms over the first half, adding 25% or RM5.25 to RM25.75.
Not all of the old plantation companies, however, enjoyed gains. Kluang Rubber Co (M) Bhd was the biggest loser in value terms for the six-month period, falling 7% or RM7 to RM93.
The performance of heavyweight stocks was mixed during the period, with Malayan Banking Bhd rising to RM8.60 from RM7.40.
After the tumultuous first half, analysts are saying that the second half should see a better performance.
“The anticipation is that there would be more positive than negative news,'' said the head of research of a local stockbroking company.