PETALING JAYA: Retail investors have returned to the stock market to bottom fish beaten down stocks in large amounts as the stock market lifts itself off its recent bottom.
With the FBM KLCI hitting a through of 1,219.72 on March 19, it has since rebounded by 12.3% with its close of 1,369.92 yesterday. Retail investors were net buyers at RM45mil while foreign funds were seen tip-toeing back with a mild net buying of RM2mil as local institutions took profit and were net sellers at RM47mil.
In that rise of the local bourse, retail investors have ramped up their trading activity in a large way according to remisiers, eclipsing the amounts they were normally trading just a few weeks ago.
In line with Covid-19 fears, retailers were net sellers for the week ended March 20 and 27 with net sales of RM104.7mil and RM38.9mil respectively. They also coincided with the worst weeks for the FBM KLCI and global markets. The Dow fell to its low of 18,213.65 on March 23.
Last month local retailers made up 22.67% out of total value traded at RM64.6bil.
Local institutions accounted for 34.21% while the foreign institutions, 27.2%.
As of April 6, retailers made up 35.8% of total participation with a net buying position of RM77mil. Local insitutions made up 44.45% with a net selling position of RM10mil while foreigners which made up the remainder 19.75% with a net selling position of RM66mil.
The improved sentiment among retail investors could also be due to the quick measures by Bursa Malaysia and the Securities Commission, such as the temporary suspension on short selling on the stock market.
In an attempt to protect investors from the recent margin call and force-selling episode, Bursa Malaysia also waived and modified several provisions related to margin financing for the next six months.
The measures have rendered a more bullish performance in the FBM KLCI over the last two weeks, and not surprisingly started to attract punters and investors looking for bargains.
“Retailers have turned net buyers in the last six days. There has been total net buying of RM445.21mil, ” said Rakuten Trade Research vice-president Vincent Lau.(pic below)
He added that most stocks have fallen between 40% and 50% of their values since mid-March.
Retailers are “buying the dips”, looking to get some value.
“Although the market has recovered from its low of 1,219.72 on March 19, most stocks have yet to reach their cost. They are still down between 30% and 40% from their peaks. Perhaps retailers see some value, ” he said.
A remisier with CIMB Securities said some long lost clients have returned to the market.
“I think we have seen the bottom. The fear in the market is gradually dissipating, ” said the remisier.
An RHB Securities remisier said retailer clients have started becoming active since last week.
“They are looking for ideas. They are asking me what else is there to buy besides the glove players?”
He added that retailers have become more confident following the supportive measures by the government, which included the RM250bil Prihatin stimulus package.
“With the additional RM10bil stimulus package for the SMEs, market participants are perhaps feeling more assured. This also provides a feel good factor to the market, ” said a Maybank Securities remisier.
On a more fundamental level, CGS CIMB research head Ivy Ng, in her strategy report yesterday, said overall, she remained “neutral” on the stimulus package as she saw the positives (the wage subsidy programme and foreign workers levy discount) to be offset by the negatives in terms of potential rental waivers by government linked companies landlords.
“We keep our end-2020 FBM KLCI target of 1,449 points, based on a forward price earnings ratio of 14.6 times for now, pending a review of our earnings estimates across the board to reflect the impact of Covid-19 and the stimulus packages, ” said Ng.
The FBM KLCI continued to exhibit strength, with the index finishing up 28.23 points to 1,369.12 on volume of RM6.54 billion shares yesterday.
It is still down 13.98% on a year-to-date basis.
MIDF Investment Research said foreign investors marked their eighth straight week of net selling in Asian equities. Based on the provisional aggregate data for the seven Asian exchanges that MIDF tracked, investors classified as “foreign” sold US$3.26bil net last week, slightly lower than the US$3.43bil disposed of in the preceding week.
“The pace of foreign net selling on Bursa Malaysia continued to slowdown last week. Based on data from Bursa Malaysia, international investors sold RM486mil net of local equities last week compared with the RM631.9mil net disposed of in the preceding week, ” said MIDF.
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