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 ?

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