DESPITE some late attempts at window-dressing, the KLSE Composite Index (CI) ended 2003 a few points shy of the psychologically significant 800-point mark. For 2003 as a whole, however, the market did perform reasonably well in a year filled with shocks and uncertainty.
The CI saw out the year with just a marginal rise of 1.22 points to 793.94 after moving mainly sideways during the day in thin trade. Although losers outnumbered gainers 445 to 351 on volume of 585 million shares, a last-minute push on blue chips enabled the benchmark index to finish in positive territory.
However, the market's muted performance on the last day of the year belied an uptrend that had seen the CI climb steadily to gain more than 23% over the 646 points registered at the beginning of 2003.
In fact, all major Asian bourses achieved gains last year. Bangkok was the top performer with the SET Index more than doubling to 770.96 points from 357.23 at the start of the year, while the Jakarta and Manila stock exchanges outperformed more established regional bourses with impressive gains of 69% and 43% respectively.
Tokyo’s Nikkei 225 gained more than 20% for the year, while the Singapore and Seoul markets rose by between 25% and 33%. Even Sydney, which was the region's laggard, ended the year 10% higher. As at Dec 30, the Dow Jones Industrial Average had also seen a gain of some 21%.
Analysts said the positive investor sentiment and liquidity which pushed the markets higher last year could easily not have materialised.
“It could have been a lot worse,” said OSK Research economist Lee Soo Kai.
After a year that could have gone so wrong – with the Iraq war and unexpected shocks such as the outbreak of SARS and continuing terrorism attacks among the key dampeners – both stock market and economic indicators seem to be looking up on the first day of the new year.
Most analysts are expecting a rise in the CI to between 850 and 1,000 points while the country is set to chalk up faster gross domestic product (GDP) growth exceeding 5% this year.
TA Securities head of research C.K. Ngu said he was bullish about the CI’s short-term 3-6 month prospects, but was more cautious for the longer term in view of expectations of interest rate hikes in the United States.
“The second half of 2004 is a bit of a wild card ? it can go either way,” he said.
Further, the elections expected in a number of Asian countries, including Malaysia, during the year could add further uncertainty to the markets, Ngu added.
However, this should not dampen interest in new listings on the KLSE. Last year saw the largest number of new listings (58) since 1997, and analysts expect this year to be even better, with the number of Mesdaq listings to at least match last year’s 20.
Technology stocks should do well this year, they said, with the global semiconductor market improving yet further after IDC, the information technology research company, recently raised its forecast for global semiconductor sales growth in 2004 to 18% from 16% previously.
Investor interest in oil and gas counters would also likely continue, although many analysts are advising caution as valuations for many such stocks are not cheap.
The risk element is also expected to remain high, but with possible further upsides on new contracts for a sector that has enormous potential, investor interest would likely stay high. “I am still cautious about the sector, although it is hard to ignore,” said an analyst with a local brokerage.
On the economy, OSK’s Lee said Malaysia’s forecast growth of between 5% and 6% this year would have a larger potential upside if the expected recovery in the economies of Europe and Japan materialised
“If that happens, there will be more balanced growth and that will boost both the global and Malaysian economy,” he said.
Did you find this article insightful?