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Friday, September 10, 2010
Thursday, September 02, 2010
MALAYSIA STOCK MARKET TRANSFORMED FROM RETAILERS' MARKET TO INSTITUTIONALS' MARKET
June 8, our CEO of Bursa Malaysia, Yusli Mohamed Yusoff said " “A lot of retailers lost a substantial amount,” The result is that the market is now “dominated by the local institutions.” " (bloomberg news screen captured is attached at the bottom of this post).
Recall back 1993 Super Bull Run, the participation of Malaysia Retail Investors were broad base, from white colar to blue colar, from business tycoons to cleaners, from senior officers to office boys, everybody were talking about share investment. Retailers started to burn their fingers in 1994 correction and 1997 crash. Many had gained back their confidence to come back into Technology Play in year 1999 - 2000. But the nightmare started after technology bubble burst in late 2000 - 2003.
Retailers are always burning their fingers after a bull run. As retailers like to buy second and third liner stocks (or so called penny stocks) for "investment". Buying such hot cakes and keeping for years, are normally ended up with "huge losses" where the share price is going lower and lower after the hot play in the bull run. The worst part is, some may goes into share consolidation, or delisting procedure after a number of years.
For instance, look at all these counters :
Hot cakes in 1993 bull run : Aokam, Granite, Mega First, GPLUS, Batang Berjuntai, Timah Langat etc
Hot cakes in 1996 bull run : Hwa Tai, Repco, Ekran, SCIB, John Master etc
Hot cakes in 2000 bull run : MPI, Unisem, CSA, Fujitsu, Patimas, AKN, Itronic, Intria
Hot cakes in 2003 bull run : Karensoft, PUC, Glomac, Liqua, Ngiu Kee etc
Hot cakes in 2007 bull run : IRIS, KNM, Carotec, Mulpha, Insas, Tebrau, Muiind, Encorp
From an initial portfolio of RM 100,000, it shrank drastically to RM 30,000 or RM 20,000 or RM 10,000 or even less than RM 10,000 worth after few years. Some of retailers don't even check their CDS Statement at all as the portfolio is now at 10 times lower or more, and some counters has been delisted but the balance is still shown on CDS Statement. For most of retailers, the bottom line is to make money, regardless what stocks they are. But the result of portfolio is deeply disappointing them. Is this the main reason of why retailers are getting lesser and lesser having direct exposure in Malaysia Stock Market?
Many years back (em..it may be 8 or 9 years back...sorry, i can't remember), all the listed shares are splitted into 100 shares per lot for trading in KLSE (it was still called KLSE when the 100 shares was introduced) to encourage more retailer participation and encourage more market trading volume. The retailers' interest was not really excited though the 100 shares trading has been practiced in Bursa Malaysia for so many years.
According to Lye Thim Long " “People’s risk appetite is not there anymore, not like those days,” said Lye Thim Loong, who helps manage $500 million at Avenue Invest Bhd. in Kuala Lumpur. “Those who traded recklessly with no fundamental reasons got burnt.” " (bloomberg news screen captured is attached in the bottom of this post).
Lately, I met a 50 years old guy, who comes from a medium class family. He told me, his father does always remind him, don't and never buy " Penny Stocks " in share market investment. But how to define a Penny Stock? Are those which below RM 1 penny stock? I think there are many ways to define penny stocks. But for me, consistent profitability plus current share price may give a clue which classification it falls into. Track quarterly results for past few years, if there is no consistency to maintain net profit plus the current share price is below RM 1, then it is likely a penny stock !
Another strategy promoted by Bursa is " Don't Buy and Hold ". I personally agree with the strategy as it can minimize or avoid the above mentioned fingers burned scenario.
Above are my observation, what are yours? And what are your strategies in the market ?
Recall back 1993 Super Bull Run, the participation of Malaysia Retail Investors were broad base, from white colar to blue colar, from business tycoons to cleaners, from senior officers to office boys, everybody were talking about share investment. Retailers started to burn their fingers in 1994 correction and 1997 crash. Many had gained back their confidence to come back into Technology Play in year 1999 - 2000. But the nightmare started after technology bubble burst in late 2000 - 2003.
Retailers are always burning their fingers after a bull run. As retailers like to buy second and third liner stocks (or so called penny stocks) for "investment". Buying such hot cakes and keeping for years, are normally ended up with "huge losses" where the share price is going lower and lower after the hot play in the bull run. The worst part is, some may goes into share consolidation, or delisting procedure after a number of years.
For instance, look at all these counters :
Hot cakes in 1993 bull run : Aokam, Granite, Mega First, GPLUS, Batang Berjuntai, Timah Langat etc
Hot cakes in 1996 bull run : Hwa Tai, Repco, Ekran, SCIB, John Master etc
Hot cakes in 2000 bull run : MPI, Unisem, CSA, Fujitsu, Patimas, AKN, Itronic, Intria
Hot cakes in 2003 bull run : Karensoft, PUC, Glomac, Liqua, Ngiu Kee etc
Hot cakes in 2007 bull run : IRIS, KNM, Carotec, Mulpha, Insas, Tebrau, Muiind, Encorp
From an initial portfolio of RM 100,000, it shrank drastically to RM 30,000 or RM 20,000 or RM 10,000 or even less than RM 10,000 worth after few years. Some of retailers don't even check their CDS Statement at all as the portfolio is now at 10 times lower or more, and some counters has been delisted but the balance is still shown on CDS Statement. For most of retailers, the bottom line is to make money, regardless what stocks they are. But the result of portfolio is deeply disappointing them. Is this the main reason of why retailers are getting lesser and lesser having direct exposure in Malaysia Stock Market?
Many years back (em..it may be 8 or 9 years back...sorry, i can't remember), all the listed shares are splitted into 100 shares per lot for trading in KLSE (it was still called KLSE when the 100 shares was introduced) to encourage more retailer participation and encourage more market trading volume. The retailers' interest was not really excited though the 100 shares trading has been practiced in Bursa Malaysia for so many years.
According to Lye Thim Long " “People’s risk appetite is not there anymore, not like those days,” said Lye Thim Loong, who helps manage $500 million at Avenue Invest Bhd. in Kuala Lumpur. “Those who traded recklessly with no fundamental reasons got burnt.” " (bloomberg news screen captured is attached in the bottom of this post).
Lately, I met a 50 years old guy, who comes from a medium class family. He told me, his father does always remind him, don't and never buy " Penny Stocks " in share market investment. But how to define a Penny Stock? Are those which below RM 1 penny stock? I think there are many ways to define penny stocks. But for me, consistent profitability plus current share price may give a clue which classification it falls into. Track quarterly results for past few years, if there is no consistency to maintain net profit plus the current share price is below RM 1, then it is likely a penny stock !
Another strategy promoted by Bursa is " Don't Buy and Hold ". I personally agree with the strategy as it can minimize or avoid the above mentioned fingers burned scenario.
Above are my observation, what are yours? And what are your strategies in the market ?
-----------------------------------------------------------
Appendix News
Tuesday, February 23, 2010
SC TO AMEND UNIT TRUST FUNDS RULES
THE Securities Commission (SC) plans to amend the guidelines on unit trust funds to allow greater flexibility in terms of offering investors choices.
Its chairman, Tan Sri Zarinah Anwar, said one of the amendments would involve offerings in multiple currencies.
"This will encourage unit trust funds to be distributed overseas and facilitate investment by foreign investors who may find it difficult to cope with vagaries of the exchange rate," she said while officiating the launch of The Edge-Lipper-Starmine Awards 2010 here today.
Zarinah said the amendments would facilitate a multi-class structure for unit trust funds.
"For example, investors will be able to choose whether they prefer paying an upfront fee with lower annual fees or higher annual fees in lieu of an upfront fee," she said.
Zarinah said this would enable better matching of the investment preferences for different investor groups.
"The currency options will facilitate the marketing of our unit trusts to foreign investors who can also invest directly into a unit trust fund in their own currency instead of having to convert their investment sum into ringgit.
"The same goes for local investors who want foreign exposure," she said.
Zarinah said the unit trust industry has done extremely well and there was a need to be innovative.
"In Malaysia, unit trusts have been the vanguard of collective investment schemes (CIS), although other forms of CIS such real estate investment trusts and exchange-traded funds have emerged over the last few years.
"In December 1993, we had 43 funds with a total net asset value (NAV) of RM28.1 billion. As at end-2009, the industry had grown to 541 funds with a total NAV of RM191.7 billion," she said.
She said the fees charged to investors needed to be reasonable and commensurate with the value that investors receive.
"Investors frequently ask whether they need to be paying such fees. In this regard high front end fees need to be rethought and recalibrated to justify the value add, while maintaining a competitive edge," she said.
As a regulator, she said, SC's philosophy was to leave the pricing of services to market forces.
"However, when there is a disconnect between the value of services offered and the price of those services, there would be a need to provide the investor with protection," she said.
She said the industry must also continue to work towards expanding the range of products and markets.
"Malaysia has a competitive advantage as an Islamic capital market hub and today has 144 syariah-compliant unit trust funds," she said.
Zarinah said the standard of disclosure remained one that the industry needed to visit urgently.
"Disclosures happen at two critical points -- through the offering document and at the point of sale.
"It is our intention to migrate towards a full post-vetting regime for offering documents to further promote efficiency and competitiveness," she said.
She said the SC, however, continued to see lapses in the standard of disclosure in such documents, resulting in pre-approval reviews that were longer than should be needed.
Zarinah said in transitioning to a full-fledged post vetting regime, a tiered system for approving applications to establish funds would be implemented.
"Unit trust management companies (UTMCs) will be tiered based on the quality of their applications (which include disclosures in their offer documents) with those at the upper most tier being subject to post-vetting (and hence faster approvals) and those at the lower tiers being subject to different degrees of pre-approval review," she said.
The tiering system, she said, would reward UTMCs who had been consistently responsible and diligent in the offering process.
Meanwhile, Public Mutual Bhd has won the "Best Overall Group" award at The Edge-Lipper Malaysia Fund Awards. -- BERNAMA
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