New Market Participation Stimulus Under PM’s Initiatives

1. Increasing Participation

  • Small Caps and Mid Caps trades are waived from stamp duty from March 2018 for 3 years
  • Availability for retail investors to increase margin financing
  • Allowing short-selling¬† by retail investors
  • New investors receive a 5 months trading and clearing fee waive

What We Think?
Small Caps and Mid Caps valuation might increase further and penny stocks might be pushed ahead once again anticipating this change. Although stamp duty isn’t a huge payment in Malaysia (Max RM200) compared to Hong Kong which are calculated based on a percentage with no limit upwards, we think that the effect on increasing market participation can be short lived rather than long term.

2. Malaysia Singapore Connect

  • This effort would lead to increasing market participation as well
  • The market base would be bigger for investor

What We Think?
We felt that this would benefit Malaysian market more than Singapore market. Investors in Singapore with higher purchasing power due to currency might be more interested to buy Malaysian stock as more quantity can be secured in terms of trading. Investors would be indifferent since the leverage of quantity isn’t quite needed for the long term.

 

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Insurance Sector New Rule by BNM

Under the latest Bank Negara compliance issue, foreign insurers listing in Bursa Malaysia requires a 30% shareholding by local investors. In the report below by CIMB, they view that we would likely see IPOs coming in for large cap insurance companies such as AIA, Great Eastern and Prudential coming into the market.

They would be required to open up their holdings to local investors let it be retail or institutional.

Another alternative would be seeing more and more M&A activities happening. Nothing much to recommend here but its a good head up for now.

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Guocoland Taking the Turn Higher?

If you look at iSaham’s data¬†(click for link) and sort if by 3 year revenue growth, one of the biggest would be GUOCO which currently sees very little movement on its stock price.

Based on the chart, a very strong support can be seen at RM 1.10 and merely the recent turn up might be a good sign to buy. The good thing about this chart is that there are plenty of support while resistance merely has one that is significant which is at RM 1.41.

We haven’t back check the facts on where iSaham get the numbers for revenue growth but the estimate should fair just right for now.

We think that this stock isn’t something that would move rapidly but more like a 2018 story. We suggest that you could start acquiring now or wait for weakness depending on your risk appetite. It would definitely take awhile before markets begin to revalue the stock.

In the meantime, keep this in your watchlist!

What Stocks have Foreigners Been Buying?

Take a look at Credit Suisse’s latest report on a summary of What Stocks have Foreigners Been Buying in Malaysia.

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Biggest increase in foreign shareholding:-

1. Malaysian Airports, +13.7pp
2. Gamuda, +8pp
3. Maybank, +5.4pp
4. CIMB, +4.8pp
5. Sime Darby, +2.7pp

Reduced Foreign Holding:-

1. Air Asia, -9.6pp
2. Karex, -3.0pp
3. Tenaga, -2.4pp
4. IOI, -0.5pp
5. Telekom, -0.5pp