MAS-Digestion and Accumulation

Hope and Faith

When it went ex-rights in early May 2013, it was in everyone's mind that this is one counter which will go nowhere for quite sometime.

The par value of the MAS shares was written off by 90 sen to 10 sen.

On top of that, there was a cash call of  4 rights shares at 23 sen per share for every share held.

Believe me, the MAS shares were, however, oversubscribed by over 41.5% and  most who applied for excess  shares got their wish come true.

Upon the listing of the new rights, MAS shares lost 2 sen from RM 0.345 and ended the day at RM 0.325.

MAS's  theoretical value  was 32 sen.  At 0.325 sen, there was even a 0.5 sen premium when the rights got listed that day.

So, while they were still in the money of (0.325 sen -23 sen= 9.5 sen), numerically strong sellers came in and sold down MAS.

Share values subsequently rose to 41.5 sen before succumbing again to fanatical selling pressure  driving the price down to as low as 30.5 sen.

As always, those who had volume in their keep, sold for quick profits while those who somehow felt they "knew" the true value of MAS shares as a GLC took a chance to accumulate based on experience, hope and faith.

Buyers  may make quick bucks  on the remote chance if MAS goes up in the short term but the probability is that they may have to lock it up for for sometime  for their MAS shares  to turn into golden eggs.

Currently it is in the long phase known as the digestion stage. At this stage, sellers will continue to sell down until there is price equilibrium. At low price levels, buyers will come out in larger numbers if they believe the counter has reach a  value worth collecting.

Once selling has dissipated, then equilibrium will arrive and price will move upwards.

As MAS shares have fallen from 40 sen, it is about 10 sen cheaper now. Perhaps, it could be bargain time for some.

If today (12 June) is any indicator, selling pressure seems to have abated and by the lunch close, MAS shares actually managed a 1/2 sen rise to 31 sen. ( It has gone back to 30.5 again by 4 pm.)

While Khazanah has taken up all their rights, it seems EPF has sold down MAS and is no longer a major holder of the stock..

Let us see how the digestion and accumulation phase will go in the next few trading sessions.

PS: on 19 June, the selling seems very much restrained though buying persists.
Share of MAS is now still hovering around the 30.5 sen to 31 sen range.