How fed rate affects stock market

- A + A (June 30): All emerging Asian currencies were set for half-yearly losses on Thursday, with the South Korean won set to lose the most, as policy tightening by the US central bank and concerns over global economic outlook spurred selling in Asian assets. The won dropped 8.4% so far this year, while the Philippine peso and Indian rupee were on track to post half-yearly losses of 7.3% and 5.8%, respectively. Emerging markets in the six-month period were battered by capital outflows due to the US Federal Reserve kicking off its tightening cycle, Russia's invasion of Ukraine, and inflation from higher commodity prices. Among local drivers, China's insistence on a zero-Covid policy also spurred selling as the country's repeated imposition of restrictions means a slower economic recovery for the region's largest economy. "The broader market ... they need some more convincing because I think at the back of their mind, they've still got this hesitancy due to the … [Read more...] about Asian currencies set for half-year losses on rate hikes, inflation woes

- A + A (June 30): Taiwan’s stock benchmark index slumped on Thursday (June 30), taking its decline from a January high to over 19% and just points away from a so-called bear market. The Taiex gauge closed 2.7% lower in Taipei, the worst performer in Asia. It was dragged by chipmakers after Bank of America took a cautious view on the industry’s growth prospects. Taiwan Semiconductor Manufacturing Co (TSMC), which accounts for more than a quarter of the index’s weighting, dropped 3.1%. Facing headwinds of rate hikes by global central banks, tech-heavy stock markets in Taiwan and South Korea have been the worst performers in Asia this quarter, both down over 15%. Foreign investors have net sold about US$16 billion (about RM70.52 billion) of Taiwan stocks during the three-month period, the most among emerging Asia countries outside China. Taiwan’s deputy finance minister said the National Financial Stabilization Fund will continue to closely monitor the stock market … [Read more...] about Bear market looms for Taiwan stocks after chipmaker-led slump

PETALING JAYA: Foreign flows into the local bond market returned to positive territory in May amid foreign investors’ flight-to-safety demand and Bank Negara’s hawkish pivot. Nevertheless, the magnitude was only a meager RM531mil, which did not completely offset the relative net foreign outflows of RM2.2bil in April. Total cumulative foreign holdings in the local bond market grew to RM911.1mil for the first five months of 2022, following the net foreign inflows. Notwithstanding this, they were significantly lower than the cumulative net foreign inflows of RM25bil from January to May 2021, according to MARC Ratings Bhd. Total Malaysian Government Securities/Government Investment Issues (MGS and GII) outstanding expanded by 11.1% year-on-year (y-o-y) to RM947.3bil in May 2022 as there was no redemption of government bonds recorded. This is notwithstanding the reduced issuances in both the MGS (May: RM4.5bil; April: RM10bil) and GII (May: RM8bil; April: RM9.5bil) segments during … [Read more...] about Foreign flows into local bond market returns to positive territory

The good news is that yields in US Treasury securities may be near their peak. The bad news is that makes the recession I’ve been forecasting since February more likely. The current campaign by the US Federal Reserve to raise its main policy interest rate — the overnight federal funds rate — in response to rapid inflation normally precipitates a business downturn. Since the central bank adopted this measure in 1954, there have been 11 recessions, and only three exceptions, or soft landings — in 1966, 1984 and 1996. A soft landing occurs as the central bank lowers the funds rate after a series of increases with no recession unfolding. Until the Fed cuts rates, it’s uncertain as to whether its credit-tightening campaign is over or has merely paused. My analysis of post-World War II history reveals that a 100-basis-point rise in the funds rate is linked to a 36-basis-point rise in the 10-year Treasury note yield, and a 24-basis-point increase in the 30-year Treasury bond yield. … [Read more...] about Bond market rally signals an impending economic recession

- A + A LONDON (June 30): Investors knew that, after two years of COVID-19 chaos, 2022 would be a bumpy ride, but nobody expected this - the most turbulent first half global markets have ever seen. To grasp just how torrid things have been, consider two things. MSCI's 47-country world stocks index has suffered its biggest 1H drop since its creation in 1990. At same time, 10-year U.S. Treasury bonds - the benchmark of global borrowing markets and traditional go-to asset in troubled times - have had their worst first half since 1788. Why? Russia's invasion of Ukraine supercharged what was already fast-rising inflation, forcing the big central banks to jack up interest rates and politicians to warn of new world orders. The result? A $13 trillion wipeout in world stocks, a 15.5% plunge Japan's yen, Italy's worst rout since the euro zone crisis, and what is shaping up to be the strongest commodities rally since World War I. Add to that Russia being gouged out the … [Read more...] about Markets in 1H: The almost perfect storm

The wet market in Old Town, Petaling Jaya, Selangor. According to Annuar, despite inflation rates being on the rise across the world, Malaysia is still among the countries with the lowest rates, which is at 2.8%. (Photo by Low Yen Yeing/The Edge) - A + A PUTRAJAYA (June 30): The government, through the Special Task Force on Jihad against Inflation, will strive to keep the inflation rate in Malaysia low and manageable to ensure the well-being of Malaysian families, Communications and Multimedia Minister Tan Sri Annuar Musa announced. Annuar, who is the chairman of the task force, said they would give attention to all prices of goods and services that could contribute to the increase in the inflation rate, apart from chicken, eggs and cooking oil. “We are also giving our assurance that we will continue taking a proactive approach to control and keep the country’s inflation at a low and manageable rate.” He said this at a press conference after chairing the task … [Read more...] about Annuar: Govt to ensure Malaysia’s inflation rate remains low, manageable

- A + A SHANGHAI (June 30): Chinese stocks marked their best month in nearly two years on Thursday (June 30), supported by signs of an economic recovery after the easing of Covid-19 restrictions. However, in Hong Kong, the benchmark Hang Seng Index slipped 0.62% to 21,859.79 points at the close, while Chinese H-shares listed in Hong Kong edged down 0.36% to 7,666.88 points. By the end of the session, the Shanghai Composite Index rose 1.1% to 3,398.62 points, while the blue-chip CSI 300 Index gained 1.44% to 4,485.01 points. Both indicesrecorded their biggest monthly gains since July 2020. Gains across the board came as official data showed that China's factory and service sectors snapped three months of activity decline in June as authorities lifted a strict Covid-19 lockdown in Shanghai, reviving output and consumer spending. China's central bank needs to keep cuts to interest rates and banks' reserve requirement ratio among its policy options while waiting for … [Read more...] about China stocks log best month in two years on recovery hopes, easing Covid-19 curbs

This article first appeared in The Edge Malaysia Weekly, on June 20, 2022 - June 26, 2022. - A + A ALL eyes are on RHB Banking Group’s newly minted group managing director (MD) and group CEO Mohd Rashid Mohamad as he steers the fourth-largest banking group by assets forward in a tough operating landscape. “It’s very challenging, especially now in a fast-changing market environment, and as we face potential risks such as geopolitical and inflationary,” acknowledges Rashid in his first exclusive interview as group MD/CEO. Competition has intensified, given new entrants into the market, which are not just new banks but also technology companies that compete for the same pie. Rashid adds that this has partly affected the profitability of the industry, along with many other factors. He notes that banks globally no longer see “high ROEs” as before. For RHB Bank Bhd, its return on equity (ROE) in the past 10 financial years hit a high of 13.4% in FY2012 before … [Read more...] about Cover Story: RHB’s Game Plan in ‘fast-changing’ new normal

Bandhan Bank share price slipped to a low of Rs 263.40 on June 28, down more than 6 percent from its previous close, on fears that the floods in Assam and neighbouring areas could impact the operation of the company in the region, analysts said. The Kolkata-headquartered lender has a large focus on the eastern parts of the country. “In most of the cases, loans disbursed by the banks in the northeast region affected by floods are non-collateral loans, thus with flood hitting the region, there is growing employment crisis leading to rise in non-performing assets (NPAs),” IIFL Securities analyst Sanjiv Bhasin said. According to analysts, some of the bank’s portfolio has gone bad already, hence the negative reaction from the market. Alongside, as evident from previous trends, whenever the market falls, the reaction is predominantly more for Bandhan Bank but it recovers fast as well, they said. They added that despite the fall, the bank is not performing too badly but the bad … [Read more...] about Bandhan Bank share price sinks on Assam flood worries

Monitors are on display at a retail shop in Seoul. [NEWS1] Samsung Electronics and LG Electronics are facing historically-high inventory levels as demand for electronic devices weakens and the world finds itself awash in everything from smartphones to appliances. The flip from dearth to glut could have a wide-ranging impact. Companies are cutting orders from parts suppliers. Workers are getting fewer hours and losing their jobs. And earnings and balances sheets could be hit. Samsung Electronics, the world's largest manufacturer of televisions and smartphones, carried 47.6 trillion won ($36.6 billion) of inventory in the first quarter, up 55.4 percent on year. The figure, which has been reported by the company since 2000, is an all-time high. LG Electronics had 10.2 trillion won of inventory in the same period, up 27.7 percent on year. The excess inventories suggest lower-than-expected sales of smartphones, televisions and other home appliances as people struggle to afford … [Read more...] about Electronics companies dealing with a ‘mountain of inventory’