Jagdev Singh Sidhu analyzed the buying and selling patterns of both local and foreign investors on Bursa KL throughout 2010 excluding December.
Here is his report from the online Star.
"Local retail investors have been net sellers of stock for all but one month up to November this year, but the pace of buying has slowly caught up with selling as the stock market rose towards its record high levels at the end of the year. [ So local investors are net sellers]
According to trade statistics from Bursa Malaysia, retailers bought RM8.93bil worth of stock in November and sold RM8.99bil worth of shares. In terms of purchases, the highest amount of shares bought or sold was in January when retailers bought shares worth RM9bil but sold RM9.1bil.
The pace of transactions declined thereafter but started to pick up in September when purchasers rose to RM5.58bil versus selling RM5.72bil worth of equity.
In October, buying and selling rose to RM7.57bil and RM7.73bil respectively and in November, when the FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBM KLCI) hit a record 1,528 points, retailers bought RM8.93bil worth of shares and sold RM8.99bil worth.
The pace of purchases also reflected the monthly value of trade done on Bursa Malaysia. Data for December has not been released.
In terms of value, the highest month of transactions based on value was November when RM39bil worth of trade was conducted. The month also saw the entry of the largest IPO in the country, Petronas Chemicals Group Bhd, which attracted a great deal of interest among institutional investors.
The value of transactions has also mirrored the FBM KLCI’s ascendency to its new peak.
Total value of trade in October was RM36.5bil and RM31.6bil worth of share transactions were done in September.
Trade value has been consistently rising since July when total transactions were RM26.1bil. The value of transactions has somewhat tracked the rising amount of foreign investor interest in the stock market.
Foreign institutions have been net buyers of Malaysian shares since June but over the last couple of months, the amount of the net purchases by foreign institutions has been shrinking.
As foreign investors have been net buyers of Malaysian shares over the past 6 months, most of that extra liquidity or shares available for purchase has come from local institutions.
Local institutions have been net sellers of shares on Bursa Malaysia since June and only emerged as net buyers in November.[Sell low, buy high? Or have they bought into Petronas Chemical?]
One of the highest months of purchases by local institutions was in March when local funds bought RM12.8bil worth of stock and sold RM13.1bil in shares.
Total transactions by local institutions dipped thereafter but started to pick up once again in September when such funds bought RM9.7bil worth of shares and sold RM14bil worth.
The net selling gap then dropped as interest in Malaysian shares picked up again and in October, local institutions bought and sold RM12.8bil and RM14.2bil worth of shares.
In November, local funds reversed their selling trend of previous months when it bought RM12bil in stock and sold RM11.5bil in shares.
Foreign investors have also increased their buying of Malaysian shares in recent months and in August bought more shares than local institutions.
Foreign investors continued to buy more shares on Bursa Malaysia compared with local institutions in September but in October, as the market continued to charged towards its record high, local institutions poured more money into Malaysian shares compared with foreign institutions.
In November, local institutions’ purchase of stocks at RM12bil was higher than foreign institutional funds which snapped up RM11.5bil worth of shares."
So it looks like local buyers are net buyers for all months except in November. My guess is that the local buyers are just the same local funds particularly EPF, Pension Funds, SOCSO, Khazanah, ValueCap and so on and so forth. There is some action on some penny stocks that are dividend paying and those affiliated with political interests.
That second liners are hardly moving is indicative that the common retail buyer is not in the market.
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