Trade Performance and Fund Flow week ended 20 September 2024
- Emerging markets experienced a broad-based market growth last week after the US Federal Reserve (Fed) began its long-awaited rate cut cycle. Despite odds favouring a 25-basis-point (bps) cut, the US Fed instead opted for a half-percentage point (50 bps) cut to a target range of 4.75% to 5.00%, marking the first rate cut since March 2020. Federal Reserve chairman Jerome Powell deemed the move a “recalibration” to account for the sharp decline in inflation since last year as well to stave off any weakening in the job market. Moreover, the US Fed has forecasted its key interest rate to drop by another half percentage point to 4.25% to 4.50% by the end of the year, and a full percentage point to 3.25% to 3.50% by the end of 2025. As a result, nine out of the ten Asian stock exchanges observed closed higher last week while the MSCI Emerging Markets (EM) climbed 2.2%.
- China’s stock markets rebounded last week as both the Shanghai Composite Index and Shenzhen Composite index closed 1.2% higher respectively. During the week, several major Chinese semiconductor companies saw their prices surge following excitement over the government’s progressive effort to develop domestic chipmaking technology. In the guide released by China’s Ministry of Industry and Information Technology’s (MIIT) aimed at promoting the use of major domestic technical equipment, two lithography machine models were specifically mentioned and recommended for use by state-linked organisation. Additionally, the country unexpectedly left its key interest rates unchanged which confounded market expectations despite economic indicators signalling a rate cut.
- Overall market capitalisation continued its upward trend and closed at RM2,056.97 bil after posting a +1.9% week-on-week (WoW) gain. The growth was driven by broad-based expansion across 12 out of 13 sectors.
- The FBMKLCI ended on a positive note and stayed above the level of 1,660pts throughout the week. The bullish trend was supported by ongoing optimism following the US Federal Reserve’s (Fed) recent 50 basis point interest rate cut, the first in four years. The dovish shift in the US monetary policy offered additional impetus to elevate investor sentiment.
Published Date
24 Sep 2024
Publisher
Bursa Digital Research
