Just before the election early this year lots of beautiful numbers were being trumpeted to the investors about how rosy the economy was, never mind how serious was the U.S. subprime crisis back then. The incredible Malaysia was immune from almost all other external factors, so went the marketing talks. Even after the unexpected poor result that saw the ruling government lost the precious two-third majority, finance minister was still optimistic about the growth although the big-talks had since been shut-off. In the latest twist the MIER (Malaysian Institute of Economic Research) has finally revised its growth forecast for the Malaysian economy to 4.6 per cent this year from 5.4 per cent earlier.
The reason for the 0.8 percent drop in growth was blamed on external factors (high oil prices) and the current political instability (finally they admitted it) but the serious note came from MIER’s executive director who said that the country’s major trading partners are slowing down – a sign of trouble in FDI (foreign direct investment). The country’s stock exchange operator, Bursa Malaysia Berhad (KLSE: BURSA, stock-code 1818), reported a 56 per cent fall in second-quarter net profit as volumes shrank when it only posted a net profit of RM28.6 million (US$8.87 million) for the three months ended June 30 compared with RM65 million in the year-ago period. Basically the local stocks are on temporary life-support and depends very much on Dow Jones to determine its’ trading direction the next morning.
Meanwhile all the eyes will be on Microsoft Corp. (Nasdaq: MSFT, stock) and Google Inc. (Nasdaq: GOOG, stock), both of which will be announcing their earnings after the closing bell today. While I do not like to trade Microsoft’s stock or option for obvious reason, Google’s consensus estimates this time around is $3.87 billion in sales (42.1 percent year-on-year growth) and earnings of $4.74. Bernstein’s Jeff Lindsay is calling on Google to report revenue of $4.04 billion and EPS of $4.91. Doug Anmuth at Lehman is estimating revenue of $3.93 billion and EPS of $4.90 billion while Citi’s Mark Mahaney is estimating revenue of $3.82 billion and EPS of $4.72 per share.
Interestingly Google is sitting on the cushion of $512 support but the analysts are expected to put on their glasses on its paid-click as well as earnings from DoubleClick. The last quarter earnings saw how foreign revenues brought in strong result to the company and this time the same expectation is on the horizon. As tomorrow is the Friday’s expiration for options the volatility is expected to be very high. However I noticed the bet on the Call Option seems to be on the boring level. Yahoo Inc. (Nasdaq: YHOO, stock) is expected to perform the opposite way from Google after the earnings – Google’s gain is Yahoo’s lose.