It was an uninspiring week for the local stock market as the corporate results reporting season had ended and there were no catalysts to drive trading activity.
The benchmark FBM KLCI dropped 10.2 points or 0.8% over the week to finish at 1,260 points last Friday. Trading volume continued to shrink last week, reflecting the waning interest in the market as the year-end festive season drew closer. Average daily trading volume fell to 588.7 million shares last week from 813.6 million shares the previous week.
The bright spot last week was DSC Solutions’ debut on the ACE Market on Wednesday. The stock recorded an almost twofold gain on its maiden trading day, rising to 74.5 sen from its initial public offering price of 25 sen per share. It finished the week at 61.5 sen, up 146% from its offer price.   
Last Thursday, the Department of Statistics released the Industrial Production Index (IPI) for October. The index rose 0.7% y-o-y for the month, its first annual increase since September 2008.
Economists were surprised by the growth, although it was marginal, as most of them had expected the economic indicator to recover only in November. Nonetheless, the market shrugged off the positive economic data, keeping the FBM KLCI in negative territory.
Last week, the Malaysian Palm Oil Board announced that the stock levels of crude palm oil had fallen a marginal 2% to 1.93 million tonnes from 1.97 million tonnes in October and that production had declined by a higher-than-expected 19.6% to 1.6 million tonnes because the harvest of fresh fruit bunches was affected by heavy rains.
However, the bullish data, which propped up crude palm oil prices, failed to spur interest in local plantation stocks due to their expensive valuations.
On the regional front, Japan’s Nikkei 225 fell 59.76 points to close at 10,107.87 points last Friday due to a downward revision in the country’s 3Q2009 GDP growth to 1.3% from an earlier estimate of 4.8%.
Last week, Japan also unveiled a new US$81 billion stimulus package to keep the world’s second-largest economy from falling into a double-dip recession.
Singapore’s Straits Times Index, meanwhile, gained 3.77 points to close at 2,800.75 points last Friday.
In the US, Federal Reserve chairman Ben Bernanke said the world’s largest economy faced “formidable headwinds” that would limit the pace of recovery. His affirmation that interest rates will be kept at near-zero levels for an extended period has seen the US dollar sink against other major currencies. The drop in the value of the greenback will help  narrow the country’s trade deficit as the prices of US products will be more competitive, say economists.
TA Securities’ chartist Steven Soo says the local bourse was relatively quiet last week because of prevailing uncertainty and volatility. He expects the market to move sideways this week, hovering around 1,250 points, and sees no positive developments to woo investors back.
Furthermore, trading tends to weaken during holiday-shortened weeks. Bursa Malaysia will be closed for a national holiday this Friday.

This article appeared in Capital page of The Edge Malaysia, Issue 785,Dec 14 – 20, 2009.