Show me the money!

IN the 1996 the movie “Jerry Maguire”, Jerry, played by Tom Cruise was left with one single client, Rod Tidwell played by Cuba Gooding Jr. Rod was nevertheless a difficult client to please and was seeking a new contract to not only keep his career but his expensive lifestyle. Rod asked Jerry to make a promise to enable him to retain Jerry as an agent.

The promise was for Jerry to show Rod the money, which indirectly means Rod wanted a big contract. Rod asked Jerry to utter the words “Show me the money, show me the money” While this week’s article is not “showing you the money” but it is giving you some ideas where money has been going the past couple of months in the local bourse, or in other words, the money flows into stocks.

We all know that the foreign fund managers have been net sellers in the market over the past four months and in fact were net sellers of up to RM10.43bil year-to-date as at 28-April.

Much of these large movements of buying/selling started in March and continued well up to 28 April, which is the focus of analysis in this article. In fact, foreigners net sold RM8.32bil worth of stocks, while local institutions and retailers’ net buying amounted to RM5.67bil and RM2.64bil respectively.

This suggests that 80% of total foreign net selling year-to-date occurred during these two months period (i.e. from 2 March and up to 28 April) while local institutions and retail net buying during the same period represented 89% and 65% of the total net buying year-to-date. For listed companies, shareholdings of more than 5% requires disclosures to be made to Bursa Malaysia and among the most active local institutions are the Employees Provident Fund (EPF), Kumpulan Wang Amanah Pencen (KWAP) and Permodalan Nasional Berhad (PNB) owned funds, via Yayasan Pelaburan Bumiputra and Amanah Saham Bumiputera.

There was also one large transaction involving Khazanah’s disposal of some 85mil shares in Tenaga amounting to about RM1bil and sale of shares in MMC during the period by Urusharta Jamaah worth some RM56mil. Some of these shares were on the other hand were bought by local institutions too.

Among the three, EPF is the most active of them, in fact close to be trading on a daily basis on some of its positions involving some 84 companies out of which 25 are KLCI index-linked stocks while KWAP dealt with 29 companies, of which 6 were KLCI-linked while PNB’s dealing was limited to just about 12 companies, of which 5 were index linked.