Retail investors make a comeback

Retail investors

PETALING JAYA: Retail investors are diving into the stock market once again as the Klang Valley enters the second week of the conditional movement control order (CMCO), thanks to the prevailing low interest rates and the likelihood of another potential slash in the overnight policy rate (OPR) next month.

There was a noticeable increase in trading volume since last week, although it has yet to hit the dizzying levels seen in August, with retailers recording the biggest gain in participation week-on-week (w-o-w) following the introduction of the CMCO in Selangor, Kuala Lumpur and Putrajaya from Oct 14 to Oct 27.

The four trading days this week up until yesterday recorded a volume of 35.75 billion, which was already 5.21% higher than last week’s volume of 33.98 billion.

CGS-CIMB Research said the average volume and value rose 11% and 29% w-o-w respectively to 6.9 billion units and RM4.8bil last week.

Of this, retail investors formed the largest share of the total trading value at 34.7%, followed by institutional investors at 24.9%, proprietary trade at 23.8% and nominees at 16.6%.

While local institutional investors showed interests in glove makers such as Top Glove Corp Bhd and Hartalega Holdings Bhd for their higher weightage in the FBM KLCI and Supermax Corp Bhd for its potential inclusion into the benchmark index, retailers have been taking profit on Top Glove and Supermax and also electronics manufacturing services (EMS) provider VS Industry Bhd, which were ranked among the top year-to-date (y-t-d) gainers.

CGS-CIMB said last week’s flows suggested that retail investors may be favouring laggard plays and were taking profits on gloves as Genting Bhd, Tenaga Nasional Bhd (TNB) and CIMB Group Holdings Bhd – among the laggards in KLCI constituents – saw the highest inflow of funds from retail investors.

Institutional investors were selling Genting and Genting Malaysia Bhd, potentially on worries over their possible exclusion from the FBM KLCI.

Rakuten Trade Sdn Bhd research vice-president Vincent Lau (pic below) said that in a similar scenario to the previous MCO, when almost everyone stayed at home, the retailer’s participation in the market has increased.

“The market has consolidated quite a fair bit anyway and there’s ample liquidity out there even when the moratorium ended. I think the theme play this quarter will still be small and mid-caps and healthcare related companies.

“There are still some bright spots in the market despite the uncertainties, such as tech stocks which went up today (yesterday), ” he said.

Local institutional investors were net buyers of RM192.7mil of equities last week as compared to RM80.1mil a week ago while local retail investors were net buyers of RM127.8mil, a huge jump from RM9.9mil a week prior.

But as local interest was on an uptrend, CGS-CIMB said foreign selling also picked up pace, with RM237.1mil of equities sold last week, up from -RM27.8m last week.

It said this was possibly due to concerns relating to the ongoing power struggle in Malaysia and potential earnings disappointment due to the CMCO.

The research house’s analysis showed that from Jan 2,2019 until Oct 16,2020, foreign investors sold RM33.7bil of Malaysian equities but this was offset by net buys from local institutional investors of RM16.3bil, local retail by RM14.2bil and local nominees by RM3.1bil.

MIDF head of research Imran Yassin Md Yusof (pic below) said the foreign outflow of funds this month has slowed, looking at the aggregate monthly fund flows.

“Up to Oct 21, the foreign fund outflow this month totalled RM461mil compared to the September and August total outflow of RM1.97bil and RM1.49bil respectively.

“However, we do note that the trend of foreign fund outflow has been prevalent this year.

“This could be due to the strong performance of the United States markets and uncertainties from the Covid-19 pandemic, ” he told StarBiz.Imran noted that the outflow was in relation to the equity markets. The bond market, however, saw an inflow of foreign funds.

Asked if foreign funds would return to the Malaysian equity market this quarter, Imran said it was possible, especially if the US Presidential election caused more uncertainties.

Domestically, he said the tabling of Budget 2021 would be closely watched as it would give an indication of the support towards economic recovery and a possible indication of political stability.

“We believe some of the themes for this quarter may be surrounding Budget 2021, such as construction.

“We also believe that the glove sector could continue to attract interest due to the resurgence of Covid-19 in countries that previously had it under control, ” he said.

CGS-CIMB said PPB Group Bhd, Lotte Chemical Titan Holding Bhd and Supermax Corporation Bhd saw the strongest net inflows from foreign investors last week.

The research house felt that foreign investors were potentially positioning for short-term trade on the listing of Wilmar International’s China subsidiary – Yihai Kerry Arawana Holdings – in ChiNext last week via PPB Group.

“Genting, Hartalega and TNB saw the highest selling by foreign investors last week, ” it said, adding that y-t-d up until Oct 16, the top five casualties of foreign net selling were Public Bank Bhd, TNB, CIMB, Malayan Banking Bhd and Top Glove.

Of the total institutional trade of RM11.7bil last week, 51.3% were domestic while 48.7% were foreign.

Retail investors make up 33.3% of the total trading value on a y-t-d basis while institutional investors, proprietary and nominees account for 31.5%, 8.1% and 17.1% respectively.

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