On the back of higher selling pressure from foreign institute (see following chart from Bursa Saham), KLCI surprisingly climbed back from 1750 lvl to 1780 lvl.
The fall and rebounce of oil price during last month was something interesting and worth study. It just demonstrate a typical case of business cycle, where falling price will deter capital expenditure investment, and thus led to a slow down in production (supply), and ultimately bringing the price back to equilibrium point. Signs already shown in US where the total US rig count is down 25% since October according to baker hughes (source).
Moving forward, the short term nature of shale oil production cycle will act as a spring keeping the oil price at equilibrium level (which is the price where NPV of new rig for shale oil is positive). This article summarize the mechanism well. For Malaysia, the induced consumption brought on by the lower oil price will be balanced out by the cut in CAPEX of oil & gas industry and lower government budget spending. Hence, despite the current short rebound of oil price, the current low oil price impact to Malaysia economy i guess will still be negative.
Current Return and performance
The estimated holding period return for KLCI in the past period (1st January 2015 - 31st January 2015) is 1.41% (with dividend included). Holding Period return for my portfolio, is 0.32%. Total holding period return for my portfolio since the inception is 8.61%, annualized to be 3.48%, this is far lagged behind KLCI total return of 17.37% (annualized, 6.85%) and almost equivalent to return from Fixed Deposit according to current market rate.
There is no trading activities this month.
