PETALING JAYA: Institutional investors are positioning for potential changes in FBM KLCI constituents, with foreign institutional investors going for stocks with potential corporate exercise and thematics; while local retail investors are placing increasing bets on laggards and Covid-19 recovery plays.
CGS-CIMB said glove makers like Top Glove Corp Bhd, Supermax Corp Bhd and Hartalega Holdings Bhd were among the biggest beneficiaries of net inflow of funds from institutional investors – possibly in anticipation of their potential inclusion and higher weightage in the FBM KLCI, the benchmark index of Bursa Malaysia.
“Institutional investors continue to sell Genting Bhd and Genting Malaysia Bhd potentially on worries over their possible exclusion from the KLCI as they were the two lowest ranking market cap stocks among the current KLCI constituents,” CGS-CIMB said in its inaugural report on fund flows.
On foreign institutional investors going for stocks with potential corporate exercise and thematics, the research house said PPB Group Bhd, Lotte Chemical Titan Holding Bhd and Supermax saw strongest net inflows from foreign investors last week.
“It would appear that foreign investors were potentially positioning for short-term trade on the listing of Wilmar’s China subsidiary, YKA in Chinext last week via PPB group. The net buying in Supermax could be a trade on its possible inclusion in the KLCI.”
It added that Genting, Hartalega and Tenaga Nasional Bhd (TNB) saw the highest selling by foreign investors last week. Year to date until Oct 16, 2020, the top five casualties of foreign net selling were Public Bank Bhd, TNB, CIMB Group Holdings Bhd, Malayan Banking Bhd and Top Glove.
On local retail investors, it said last week’s flows suggest that retail investors may be favouring laggard plays and were taking profits on gloves.
Genting, TNB and CIMB – among the laggards in FBM KLCI constituents – saw the highest inflow of funds from retail investors last week.
“We saw retail investors taking profit in Top Glove, Supermax and VS Industry Bhd last week – which are ranked among the biggest gainers year to date.”
The research house noted that last week daily turnover volumes and values on Bursa Malaysia rose following conditional movement control order (CMCO) in the Klang Valley, with retail investors recording the biggest gain in participation.
Average daily turnover volume and value rose 11% and 29% week on week respectively to 6.9 billion units and RM4.8 billion last week. 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%.
Year to date, retail investors make up 33.3% of the total trading value, institutional investors 31.5%, proprietary 18.1%, and nominees 17.1%.
Meanwhile, foreign selling picked up the pace last week, possibly due to concerns relating to the ongoing power struggle in Malaysia and potential earnings disappointment due to the CMCO.
Foreign investors were net sellers of RM237.1 million of equities last week, and from Jan 2 to Oct 16, foreign investors sold RM33.7 billion of Malaysian equities but this was offset by net buys from local institutional investors (RM16.3 billion), local retail (RM14.2 billion), and local nominees (RM3.1 billion).
A worker inspects disposable gloves in a Top Glove factory in Shah Alam. CGS-CIMB says glove makers like Top Glove, Supermax and Hartalega Holdings have been among among the biggest beneficiaries of net inflow of funds from institutional investors. – AFPPIX
Source: The Sun Daily
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