Foreign, retail buys spur Bursa trading

The momentum is in the larger capitalised stock, and the buying has been steady, says Jupiter Securities' head of research

Malaysia's stock market drew more buyers than sellers among foreign investors in October while small or retail investors made up almost half of the trading volume, data from Bursa Malaysia showed.

Jupiter Securities head of research Pong Teng Siew expects the trend to continue this month, as local institutions like the Employees Provident Fund need to sell to raise income for dividends.

"They need to sell to pay dividends. But, because the market is strong the local institutions will also be buying stocks," Pong told Business Times in a telephone interview.

It is also clear that foreign funds are buying although they have yet to do so in large quantities."The momentum is in the larger capitalised stock, and the buying has been steady," said Pong.

Last month, foreign funds bought RM10.6 billion worth of stocks and sold some RM8.8 billion of them.

In contrast, domestic funds bought RM12.8 billion worth of stocks and sold some RM14.2 billion worth of stocks.

Meanwhile, Lee Cheng Hooi, Maybank Investment Bank's head of retail research for equity markets, said that retailers were also strongly back in the market.

Lee added that opportunities are abundant in the market, and retailers should focus on laggards and lower-priced stocks.

Last month, retail players bought RM7.6 billion worth of stocks and sold RM7.7 billion worth of stocks.

Retailers accounted for 48.04 per cent of the 25.2 billion shares traded in October.

Yet another indicator of retailers coming back to the market is the rise in volume on Bursa Malaysia's FBM Small cap index, which measures the performance of stocks with smaller market values.

This has led to a surge in demand for stocks below RM1. Over the past three months, from the 17 stocks that have gained more than 100 per cent, 13 of them are priced below RM1.

Among the penny stocks that have notched gains of 200 per cent or more are Scope Industries Bhd, Karambunai Bhd, Petaling Tin Bhd, Majuperak Holdings Bhd, Ho Wah Genting Bhd and Cuscapi Bhd.

Apart from sentiment, cheap credit has also helped stir the layman's interest in equities.

According to Bank Negara Malaysia, up to September this year, some RM35.6 billion, which is an increase of 8.1 per cent over the same period a year ago, was lent by banks for purchase of securities.

Pong says the bulk of the money went to large corporations to fund takeovers, and retailers are getting their purchasing power from loans provided by stockbroking firms.