SAKP saw the highest increase in foreign shareholding after its major merger in 2012, followed by TNB as it re-rates amid power sector restructuring.

Against net foreign selling in the broader market since Jun 2013, foreign funds continued to pick up on TNB and PCHEM, but sold heavily on UMWH, Gamuda, CIMB, UEMS, OldTown.

Changing portfolio holdings is normal; but what we observe points to the obvious, i.e. overseas money continued to buy on fundamentals regardless of the direction of fund flows.

What’s New

We took an academic exercise, looking at the foreign shareholding movements for the stocks under our coverage over two continuous periods: (i) from Dec 2011 to Jun 2013, when foreigners were largely net buyers of Malaysian equities; and (ii) from Jun 2013 to Dec 2013/Jan 2014, when foreigners were net sellers.

What’s Our View

In the earlier period of Dec 2011-Jun 2013, stocks with >5ppts rise in foreign shareholdings (vs +2ppts in the broader market) were SAKP, Gamuda, Maybank, TNB, UMWH, MAHB, UEMS, Mah Sing, AMMB and Public Bank. Stocks with >5ppts fall, defying the market trend, were TM, SP Setia, Bumi Armada and KLK.

In the recent period of Jun 2013-Dec 2013/Jan 2014, stocks with >5ppts fall in foreign shareholdings (vs -1.5ppts in the broader market) were UMWH, Gamuda, CIMB, UEMS and OldTown. Only TNB saw a >5ppts rise in foreign shareholding and PCHEM, a 4ppts rise.

Collapsing the two periods together, SAKP has seen the highest foreign shareholding rise of 20.7ppts as it continuously re-rate after its major merger. This is followed by TNB (+17ppts) amid the restructuring of the power sector. Others with significant increases are Maybank (+7.9ppts), Gamuda (+6ppts), AMMB (+5.8ppts), MAHB (5.5ppts), and YTLC (+5ppts).

The reasons for the rise/fall in foreign interest are company/ sector specific. There is no change in our stock calls following this exercise. SAKP, TNB, Gamuda and AMMB are in our BUY list.

Source: Maybank Research - 13 Mar 2014