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Trying to Make Sense Bursa Investments

Author: Ben Tan   |   Latest post: Thu, 6 May 2021, 4:47 PM

 

Top Glove, Supermax, Kossan, Hartalega: Foreign Investors, Retailers, and Bursa

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It is no secret that foreign investors haven't been the biggest fans of Bursa for a while now. As a group, foreign investors have been net sellers of Malaysian stock almost inconvertibly since early 2018. At present the foreign shareholding of Bursa-listed companies has fallen close to an all-time low of 20.3%, seen only once before (in 2010, in the midst of the Global Financial Crisis). While this should worry (or at least be seriously noted by) both related stakeholders and local investors, it is interesting that foreign investors have continuously been buying into one sector since the beginning of the year. I first reported on this about a month ago here.

According to data by CGS-CIMB, number 1 in the net buy list of foreign institutional investors in Malaysia since the beginning of the year, is Top Glove, followed by Supermax. A distant third is Press Metal, and Kossan comes fourth right after that. Hartalega is eighth. Here is how the top 10 list of net buys for foreign investors YTD looks like:

Stock Net Buy (RM million)
TOPGLOV 956.7
SUPERMX 421.9
PMETAL 189.9
KOSSAN 152.9
KLK 135.9
PCHEM 134.5
SIME 126.4
HARTA 121.7
HEIM 103.2
FOCUS 101.8

Note again that this is amid a significant net outflow of foreign funds from Malaysia's stock market. In recent chats I have mentioned that I myself would have likely been very cautious about Bursa, if it was not for the heavy sell-off in that same sector foreign investors have been buying into, which started around October-November last year. It seems like my opinion coincides to a certain extent with that of foreign institutional investors. Time will show if we have all been wrong.

Another interesting development is that while retail investors have been net buyers of Supermax year to date (6th highest net buy for the investor group), they have turned net sellers of the company's stock last week (4th highest net sell for the week) while Supermax has topped the list of net buys of foreign investors 3 of the past 5 weeks (including last week).

In fact the market movements of retail investors and foreign investors appear to rarely overlap, except for in regards with gloves (sometimes). Retailers have been buying Public Bank, Tenaga (top two buys YTD), Maybank (fourth highest buy), and Digi (10th buy), and they have been selling Focus Dynamics (5th highest sell) and Press Metal (8th highest sell). Foreign investors' top sells YTD are Tenaga and Public Bank, while Digi and Maybank are in their top 10 list of net sells (based on CGS-CIMB Strategy report for the week of 29 March to 2 April 2021).

Important disclaimer: Any views expressed are for informational and discussion purposes only. None of this information is intended as, and must not be understood as, a source of advice. It is imperative that you always do your own research and that you make any decisions based on your personal situation and your own personal understanding.

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Related Stocks

Chart Stock Name Last Change Volume 
TOPGLOV 5.26 +0.20 (3.95%) 14,864,800 
SUPERMX 4.96 +0.09 (1.85%) 36,750,300 
KOSSAN 4.19 +0.17 (4.23%) 9,205,800 
HARTA 9.56 +0.31 (3.35%) 5,763,300 

  6 people like this.
 
katsul51 Thanks for the article Ben. Appreciate your constant and valuable update.
07/04/2021 1:42 PM
Bizfuneng So the foreign investors now have becoming a net buyer. Is it good or bad?
07/04/2021 7:41 PM
signn should be good foreign funds are buying.

prepare for the next upside
07/04/2021 7:44 PM
arv18 If a tree falls in a forest and no one is around to hear it, does it make a sound?
07/04/2021 9:48 PM
Ben Tan katsul51, Bizfuneng, signn, thank you for your comments.

Bizfuneng, foreign institutional investors buying certain shares doesn't affect (for the most part) the business of the companies they are buying shares of, so from purely investment point of view it makes no major difference. However, in general higher institutional investor shareholding base means less volatility in the stock price, as compared to higher retail investor shareholding base, so this might be one positive.
08/04/2021 8:34 AM
yong99 Hi , am newbie in stock investing .
Could anyone explain what ‘net buy’ means ?
Isn’t the short selling of glove stock been participated by foreign investor too ?
Does this indicate that they value that they bought more than they sell ? Then why is the net short position of TG still stand at 3 % ?
Thank you.
08/04/2021 12:39 PM
Ben Tan yong99, thank you for your comment. My best advice would be to stay away from the stock market if you are unprepared. Otherwise the chance of disappointment is much higher than the opposite.
08/04/2021 3:47 PM
yong99 Okay thanks for your advice
08/04/2021 4:59 PM
newbie8080 Actually, foreign buying may not be a good thing.

2 reasons

One, some of them do not stay long term (>5years), when exit due to their large size, will be a drag on share price.
a)Exit due to forex not favorable to their home country.
b)Exit due to financial crisis and needing to unwind their position to support their local portfolio.

Two, their influence as majority shareholding such as Carl Icahn and Nelson Peltz are normally act as activist to unravel scandals or CBT issues within the company.
In this case, may further hurt on ESG issues in Msia.
09/04/2021 7:35 PM
arv18 One thing you can always count on is a nice slump in glove stocks when Ben Tan writes an article. Cheers Ben.
13/04/2021 8:06 PM


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