The local market commenced the week on a positive note with the FBM KLCI touching a record intraday high of 1,532.0 points on Wednesday. However, a pull-back in offshore markets caused the FBM KLCI to ease to 1,499.8 points and register a loss of 0.8% for the week.

The average daily trading volume was sustained at 1.7 bil units compared to the previous week while average trading value eased to RM2.4 bil from RM2.7 bil over the same preceding period.

On Wall Street, share prices fell on concerns that global economic activities may be dampened by monetary tightening measures in emerging economies to curb rising inflationary pressures. The Dow fell by 2.2% to close at 11,193 points while the Nasdaq was down 2.4% to close at 2,518 points over the week.

In the U.S., consumer sentiment in the U.S. strengthened with the University of Michigan consumer confidence index rising to a 5-month high of 69.3 in November from 67.7 in October on the back of an improving job market and rising stock prices. Meanwhile, U.S. initial jobless claims fell to a 4-month low of 435,000 for the week ended 6th November compared to 459,000 claims in the previous week. After registering a 9.1% increase in August, the U.S. trade deficit narrowed by 5.3% month-on-month to US$44 billion in September as the weaker U.S. dollar caused imports to decline in September.

Oil prices registered a weekly decline of 2.3% to close at US$84.88/brl due to expectations that rising interest rates in China may curb its demand for oil.

On the domestic front, industrial production growth gained pace to 5.6% in September from 3.8% in August amidst increased output in the manufacturing and mining sectors. However, manufacturing sales growth slowed to 7.6% from 8.7% over the same period on the back of lower sales of electronics, machineries and motor vehicles.

On 12th November 2010, Bank Negara Malaysia kept the overnight policy rate unchanged at 2.75% as the current level of interest rates is deemed sufficient to support domestic demand.

The Ringgit closed at RM3.116 to register a weekly decline of 0.9%. On a year-to-date basis, the Ringgit appreciated by 10.4% against the greenback.

Looking ahead, the local market is anticipated to continue moving in tandem with overseas markets as investors continue to monitor the recovery of global economic activities and the normalisation of interest rates.

As at 12th November 2010, the local stock market is valued at a P/E of about 16.1x on 2011 earnings, which is below its 10-year average P/E ratio of 16.7x. The local market is also supported by a gross dividend yield of 3.5%, which is lower than the 10-year average of 3.8% but exceeds the 12-month fixed deposit rate of 2.85%.