KLCI - Had The Bad Day Over?

RicheHo

Publish date: Sat, 29 Aug 2015, 12:10 AM

KLCI index closed at 1,532.12 on last Monday. Then it rebounded 4 days consecutively, 80.60 points and closed at 1,612.74 today. It seems like the market had recover and the bad day had over, isn’t it? However, KLCI index only represents 30 top blue chip stocks in Bursa and does not represent the whole stock market. It means that as long as most of the 30 stocks move up, the index will follow too.

Daily Trading Participation	8/24 Mon	8/25 Tues	8/26 Wed	8/27 Thurs
Foreign, RM	-378.8	-337.8	-301.4	-9.0
Retail, RM	-6.5	-15.1	-13.0	-30.1
Local Institution, RM	385.3	352.9	314.4	39.1

Have a look at the above Daily Trading Participants and you will know what am I trying to say. Even though KLCI index rebounded 80.60 points over the past 4 days, but the foreign investors are still pulling out their fund everyday! They had net sold for 4 days continuously and for the first three days, they pulled out RM1.018 billion! Same as retail investors, they had also net sold for 4 days continuously. Local institution is the only one who supporting the stock market! But, how long can they support and how much money can they keep pumping in?

I believe the local institution which supporting the stock market are government linked investment companies, such as Khazanah, PNB, EPF, KWAP, Lembaga Tabung Haji, etc.. It’s one of the methods that the government tried to prevent the stock market from falling further down. They also wanted to boost up the retail investors’ confidence to continue invest in the stock market. Besides, the National day is just around the corner, so probably the government is trying to turn the situation around temporarily. However, the overall picture shown that either foreign investors or local retails investors is still pulling out from the stock market. The rise of the KLCI doesn’t mean the market had recovered. I strongly believe it was just technical rebound!

Another weird things that strengthen my thought was today PUT warrant price action. There are currently 23 PUT warrants in the stock market. I picked 3 of them to show. Have a look.

FBMKLCI-HK

FBMKLCI-HT

FBMKLCI-HW

Did you guys spotted the similarity between them? FYI, KLCI index rose 11.04 points today. However, this three PUT warrants moved at the opposite direction and closed at a higher price compared to yesterday. Each of them started off at a very low price during market opened and then moved up at the last hour of market (开低走高)! Why is it happened at the last hour of market? The only reason I can think of is many investors expect the KLCI to drop on next week! It is not a good sign!

Nobody will know what will happen to the stock market on next week. Tomorrow is Perhimpunan Bersih and the coming Monday is National day. These two important days will have a significant effect to the stock market. As a conclusion, so far foreign investors are still pulling out from Malaysia. Without them, Malaysia stock market will still remain weak. I do not see any sign of recovery yet in the economy even though MYR had slightly strengthened today. Therefore, I still remain pessimistic with the stock market.

Is this the eve before thunder storm? 暴风雨的前夕? I HOPE IT IS.

Just for sharing.

http://rhinvest.blogspot.com/2015/08/klci-had-bad-day-over.html

Discussions

6 people like this. Showing 20 of 20 comments

annmix

Oil price is rebounding strongly, will this change the sentiment of the market? Also monday to wed foreign fund flowing out becoz rm drop lowest, how about thursday n friday? Why the chart not including friday data

2015-08-29 03:34

Icon8888

I am writing an article with a more positive spin

Maybe the worst is over... At least for the short term...

2015-08-29 08:02

penangkia75

Good article. Thx for sharing

2015-08-29 11:19

gohcm

quick question, mind sharing where you get those daily participation figures from? Thanks

2015-08-29 13:41

Jal 贾彬得

i dont think the worst is over.....wait for fed interest rate and next year iran lift up sanctions

2015-08-29 13:47

Icon8888

This outlook thingy has to be split into short term, medium and long term

Fed rate hike and usd40 oil is short term

Iran is medium term

Beyond that is long term

So when we discuss outlook, we need to cover all the above mentioned periods

2015-08-29 13:54

Winner

Don't forget bout the unstable political situation in Boleh Land... Foreign investors still keep selling...

2015-08-29 15:31

8wpwtmt8

BERSIH 4 really tarnish the image of Malaysia. The whole world can see.

2015-08-29 20:46

Ven Felix

Malaysian Boleh 万岁。Let see who is the Boss, don't play up Malaysian . Those stupid Monkey cabinet so worship their Trojan boss, what are the deal offer , they will pay for it by 100 fold , due to terima gaji buta , using people resources to con the real boss (rakyat), ignorance or too stupidity to realize the desperation of the society. Only knkw to talk crap that siok sendiri. I'm telling those monkeys we won't buy your stupid ceramah. Do your duty and admit your faults and biases , take responsibility to your real boss. Otherwise, you will pay for every single sins by Generations.

2015-08-29 20:50

yungshen1

for those who are follow his opinion.i can say u guys sure earn some money next tuesday.i am going to buy 10 lot on tuesday fbm-hv and fbm-hw.tq

2015-08-29 21:00

8wpwtmt8

http://www.malaysiakini.com/news/310411
Tun Dr Mahathir and wife made surprise visit to BERSIH 4.

2015-08-29 21:18

8wpwtmt8

http://www.malaysiakini.com/news/310397
This is "kuasa rakyat", said Dr Siti Hasmah.

2015-08-29 21:28

8wpwtmt8

Yungshen1: Thank you for your support. I just hope Dow Jones and oil will close flat again next Monday.

I can only be certain that next Friday's jobs report will be VERY robust and this will give green light for Federal Reserve to raise interest rate. Dow Jones might fall by three digits next Friday and the following Monday.

2015-08-29 21:32

apprentice

One reason why put warrants went up last half hour could be due to buyers not clear what they are getting themselves into. Typical Malaysian, friends make money, they don't want to miss the band wagon. Taxi drivers, Ah Sohs all buying put warrants.

There is no data for Friday, whilst there was heavy selling by foreign investors first 3 days, it dried up on Thursday. Many would have sold down in the hope of buying cheap when the KLCI drops below 1500. That did not happen and the selling stopped, probably by Thursday morning.

I may be wrong but looking at the trend, the big boys and institutions issuing the put warrants will bring the KLCI back to 1700 level by concentrating on just a few of the 30 index counters. 45 sen put warrants will be back to 10 sen.

Bersih 4 was a peaceful affair with no untoward incidences thus making a drastic drop of KLCI on Tueday even less likely.

Warrants, either call or put should not be purchased at extremely high prices as the drop can make it worthless in a month.

Just my 2 sen.

2015-08-29 21:40

ccs999

If I am not mistaken, FF is net buyer during Friday 28/8.

2015-08-29 21:43

yungshen1

dun panic frist.few 3 days ago just correction.for those know see the candle.the candle open lower n closed high on friday.that mean next few day will continue gain.tq

2015-08-29 22:21

RicheHo

Thanks for all the comment! It can be quite subjective, but no matter how the market condition is, please be more caution and minimize your risk. In fact, the whole global market is still unstable now.

Apprentice, thumb up! You have your point haha.

2015-08-30 00:20

albatraoz19

Wild card week ahead

2015-08-30 11:19

reymond

Definitely a good read

2015-08-31 15:21

foreign_fund

RicheHo, why no data on foreign fund participation on 28/8 and 1/9? If possible update daily.

2015-09-02 04:04

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