Identify winning positions in the market | The star

BASED ON statistics provided by Bursa Malaysia since the start of the year, the biggest buyers on the local exchange in the form of market participants are retail investors with a total net inflow of around $ 11.7 billion. RM as of November 24, 2021.

While we have seen net buying among foreign institutional investors over the past three to four months, net inflows are still not significant to reverse the year-to-date net outflows, which currently stand at 1.8 billion RM.

With this, local institutions became the biggest net sellers in the market with an outflow of RM9.9 billion.

The above is only an overview of market flows and it does not or is not able to show to what extent the inputs / outputs have turned out to be the right investment decisions by market participants. respective ones, in particular with regard to individual actions.

Overall, we know that the benchmark FBM KLCI has underperformed with the index falling 6.7% so far this year, but does that mean investors haven’t not carried out profitable transactions?

Have investors been able to generate positive returns or have they caught falling knives?

To answer this sixty-four thousand ringgit question would require a more powerful and powerful tool to identify who, in the first place, is a better market participant among the three groups of investors.

And second, which particular company has been the biggest provider of positive returns for investors.


Bursa Malaysia’s data analytics and marketing arm, in partnership with a little-known fintech startup, DIBots IT Solution Sdn Bhd (DIBots), has been at the forefront of this revolutionary data-driven platform. which provides detailed business demographics and market and stock overview. .

DIBots Intelligence, as the subscription service is known, can provide market data that identifies the trend and helps investors make better investment decisions.


While not marketing or promotional material for the company, this column was rather impressed with the data DIBots can provide and applauds Bursa Malaysia’s efforts to provide more transparency and accountability. information that can help investors make more informed investment decisions.

Institutional investors get it

Let us first look at the flow of funds between foreign investors, including those made via nominees.

Table 1 shows the top 10 net entries and exits of this group of market players based on DIBot data. For net inflows, we can observe that with the exception of Nestlé, the net buying interest among the remainder of the top ten stocks is positively correlated with the performance of the underlying stocks.

For net exits, we can conclude that due to persistent selling pressure in companies like Hartalega Holdings Bhd, Gamuda Bhd, Dialogue group Bhd, Tenaga Nasional Bhd, and Genting Plantations Bhd, the performance of these companies has been negative since the start of the year and investors would be sitting on mark-to-market losses or potentially realized losses.

In this case, it can be concluded that the foreign fund managers have done a good job taking profits in these companies, as the respective stock prices have been lower since the start of the year.

However, for companies like Public Bank Bhd, MISCELLANEOUS Bhd, Genting Malaysia Bhd, Telekom Malaysia Bhd and Genting BhdAlthough foreigners have also been net sellers in these companies, their decision to take profit was likely missed on time as the underlying stocks have outperformed positively since the start of the year.

Overall, of the 20 stocks on the net in / out list, foreign fund managers got it right in 14 of them – a 70% success rate. Interestingly, they were mostly right about their net buying decisions.


Mixed performance among local institutions

Similar to the analysis done on the flow of foreign funds, a similar picture can be seen among local institutions as well, as shown in Table 2, which also includes transactions made through institutional agent accounts.

Out of the 20 stocks for which local institutions have recorded the highest net inflows / outflows since the start of the year, local institutional funds have managed to get things right on only nine of them, i.e. a rate of 45% success.

For this group’s net entries, they were only wrong in being net buyers in companies like Gamuda, Dialog, Hartalega and Genting Plantation, while in net selling, local institutions were wrong in selling stocks like Petronas. Chemicals Group Bhd, Malayan Banking Bhd or Maybank, Inari Amertron Bhd, CIMB Group Holdings Bhd, Public bank, IHH Healthcare Bhd and Metal Press Aluminum Holdings Bhd.

Indeed, we can also observe that what was right for foreign institutions in terms of net buy / sell were bad transactions for local institutions in terms of net sell / buy.

Access to data is essential

Since the implementation of the First Order of Movement Control (MCO) in Malaysia in March 2020, retail investors have been the biggest net buyers in the market.

Due to the lack of trade statistics and data available for this group of investors, they are in fact either sitting on huge losses or have missed the opportunity to make better returns as the stocks sold by them continue to have a good run.

Table 3 summarizes the retail trade flows since the start of the year, which also includes transactions made through retail nominee accounts. Based on the top 10 net in / out among retail investors, retail investors were only right by being net buyers of Public Bank and Maybank, as since the start of the year these two companies generated positive returns.

However, while these data points may not seem encouraging, retailers can subscribe to the DiBots Intelligence platform, as previously mentioned, to gain more meaningful insight to help them make better investment decisions. and improve their investment strategies.

The current scenario also serves as a timely call to action for the industry.

Led by Bursa Malaysia, the stock exchange community as ecosystem partners can provide greater support to retail investors by reducing the information gap that often cripples the investment decisions of these investors.

It starts with a better understanding of the customer experience of retail investors in the market, such as different investing styles or trading behaviors, which can lead to the development of targeted financial education campaigns or digital solutions to address varied investment needs.

By making the right foray into the use of technology and big data to create intelligence, Bursa Malaysia, with the participation of brokers, will achieve positive results with a more dynamic and educated segment of retail investors.

A word of warning

Since the above data is based on the performance of the individual stock since the start of the year, the return performance, which is based on the inflow or outflow of funds, may or may not reflect the group. real individual investor realized or unrealized. posts.

For example, in the case of Hartalega, retail investors may still have realized a gain if they had sold their investments much earlier and may have become net buyers more recently.

Likewise, the sale of the same share by foreign institutions is only the cumulative net sale of all foreign investors in the share.

Individually, the sale or purchase may have taken place over a period of time and some transactions may also have been profitable or loss-making.

Therefore, while the flow of funds tells a story, there is another element that makes a trade win or lose and that is timing.

To help investors track flows, a better way is to identify flows over a shorter time horizon, for example daily, weekly or even monthly flows.

Therefore, just like how investors deploy technical charts to assess entry or exit points, the data provided by DIBots can also be used to improve an investor’s entry or exit points on the market.

Pankaj C Kumar is a longtime investment analyst. The opinions expressed here are his own.

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