Led by weaker offshore markets, the FBM KLCI fell below 1,500 points to touch five-week intraday low of 1,476.8 points on Wednesday. However, selected bargain-hunting helped the FBM KLCI to close at 1,492.1 points for the week and register a decline of 0.9%.

The average daily trading volume was sustained at 1.2 bil units compared to the previous week while average trading value rose to RM2.3 bil from RM1.6 bil over the same preceding period.

On Wall Street, share prices moved in a trading range over the holiday-shortened week as investors stayed on the sidelines ahead of the holiday shopping retail data. The Dow fell by 1% to close at 11,092 points while the Nasdaq was up 0.7% to close at 2,535 points over the week.

In the U.S., the labour market improved with the initial jobless claims falling to a 28-month low of 407,000 for the week ended 19th November compared to 441,000 claims in the previous week. Meanwhile, U.S. existing home sales fell by 2.2% month-on-month to a seasonally-adjusted annual rate of 4.43 million units in October after rising by 10% month-on-month in September as credit conditions remained tight.

Oil prices registered a weekly gain of 2.8% to close at US$83.76/brl following news of better-than-expected initial jobless claims.

On the domestic front, Malaysia’s GDP growth eased to 5.3% in 3Q2010 from 8.9% in 2Q2010 due to slower growth of the manufacturing and services sector. For the first nine months of 2010, Malaysia registered GDP growth of 8.0% compared to a decline of 1.7% in 2009 amidst a rebound in exports and private investment.

Malaysia’s inflation rate rose to 2% in October from 1.8% in September on higher food and transportation costs.

The Ringgit closed at RM3.155 to register a weekly loss of 1%. On a year-to-date basis, the Ringgit appreciated by 9.1% 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 26th November 2010, the local stock market is valued at a P/E of about 16.2x 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%.