Global marts slowing down, says IBB ICAM

The Islamic Bank of Brunei (IBB) Capital Asset Management (ICAM), in its third-quarter report, said global markets had slowed down since August, as "stocks have become overvalued and are due for reassessment given that economic news is starting to look less bullish than it did in the second quarter," the local Islamic financial institution reported on Wednesday.

ICAM said, "in relation to the IBB global equity fund", markets traditionally do not do well in the months of September and October "but we believe that most of what's going on is plain old profit taking and/or protecting gains before Q3 earning announcements.

"Neither is there strong economic or corporate development that warrants to take more profit and/or push cash back to the high levels of 2002."

The economic fundamentals would continue to improve and provide a solid base for stock prices, the report said. Second quarter GDP was revised upward to 3.3% and initial jobless claims were up less than expected.

However, consumer sentiment came in lower than expected, which probably reflects continued concern about the unemployment rate.

"Just ahead, we have third-quarter earnings, and that trend is fairly positive. A U-shaped recovery seems on track and a range bound market is what we see for the next few weeks," ICAM reported.

Relating to the IBB Asia Equity Fund, the resilience of Asian currencies, in the face of continued and aggressive central bank intervention related to the investors' expectations with regards to the cyclical economic upturn. Japanese growth prospects continued to brighten, with help from stabilised financial system with an improvement in banks' balance sheets aided by government stock purchases, "which has allowed stock prices to find floor."

As a result, Japan enjoyed a consistent trend of portfolio inflows.

There were more signs of recovery in Hong Kong with an improving job market causing average three month unemployment to fall marginally from 8.7% to 8.6% while underemployment improved from 4.2% to 4.0%.

IBB ICAM believed that the resurgence of tourist inflows, particularly those from mainland China, helped to boost Hong Kong's battered retail and hotel industries. A sharp rise in prices and successful pre-sales of high-end properties led to a 14% rebound in secondary market in the area, the report concluded.

Courtesy of Borneo Bulletin