The chart above shown a correlated movement of KLSE Composite Index (the blue line) and EWM (the red line)
What is EWM?
EWM is an Exchange Traded Fund (ETF) that is meant to track the MSCI Malaysia Index, the iShare MSCI Malaysian Index Fund that is listed on New York stocK Exchange.
An ETF is a part of an investment portfolio traded on stock exchange just like shares. An ETF holds assets such as shares or bonds and trades at approximately the same price as the net asset value of its underlying assets over the course of the trading day. The most popular ETF’s listed in Wall Street track an index, such as the Dow Jones Industrial Average or the S&P 500.
An ETF combines the valuation feature of a unit trust which can be purchased or redeemed at the end of each trading day for its net asset value, with the tradability feature of a closed-end fund, which trades throughout the trading day at prices that may be substantially more or less than its net asset value. Closed-end funds are not considered to be exchange-traded funds, even though they are funds and are traded on an exchange. ETFs have been available in the US since 1993 and in Europe since 1999. ETFs traditionally have been index funds,
Locally, three ETF’s are traded on the Bursa Malaysia, ABF Malaysia Bond Index Fund and FBM 30 ETF managed by AmInvestment Services Berhad, and MYETF Dow Jones Islamic Market Malaysia TITANS 25 managed by i-Vcap Management Sdn Bhd
There is one closed-end fund traded at Bursa Malaysia, Icapital.biz Berhad, managed by Capital Dynamics Asset Management Sdn Bhd.
As an index fund, EWM seeks to track the performance of an Bursa Malaysia index by holding in its portfolio either the contents of the index or a representative sample of the securities in the index.
Trading on EWM commenced on 3rd December 1996 and EWM holds shares of more than 60 companies that trade on the Malaysian stock market.
The two charts above shown clearly the relationship between EWM and KLSE Composite Index on daily basis for the last three months.
The chart below depicted the movement of EWM as against the Dow Jones Industrial Average (DJIA). It was reported that EWM has a beta of 0.76 as against the DJIA last month. (Not a perfect correlation between EWM and DJIA).
The chart below is a 15 mins chart of EWM for lat 10 days. From casual observation, EWM has been uptrending since the last low on Thursday. A reverse head and shoulders pattern is forming but this could not be verified since the second shoulder is not formed yet.
Last Thursday, DJIA penetration of 8,000 mental support level was swiftly reversed by the last hour of New York trading session. A double bottom was formed as a result, but the target high has been reached. The coming week market is expected to track the development of Citicorp crisis and Bursa Malaysia is expected to experience early weakness before further upward movement.
