By Cheah Chor Sooi
TRADING activities in the local bourse seems to have a positive correlation with the conditioned movement control order (CMCO).
The rebound in trading activities which may still be in nascent stage follows a surge in yesterday’s traded volume to a near one-and-a-half month high of 11.04 billion shares – the highest since Sept 2 when 11.6 billion shares changed hands.
Doubtlessly, such briskness in trading activities is nowhere close to the buying craze which spurred daily traded volume and value to balloon to record highs numerous times especially between the months of July and August.
For the record, the current all-time highs for traded volume and value stand at 27.8 billion securities (Aug 11) and RM10.45 bil (Aug 4) respectively.
Recall that trading activities at Bursa Malaysia started to pick up soon after the CMCO came into place on May 4 with the easing of lockdown measures following implementation of the MCO beginning March 18.
In a way, the CMCO which was enforced until June 9 enabled freedom of movement within states with most businesses being able to resume their operations.
The CMCO was subsequently replaced with the Recovery Movement Control Order (RMCO) which took effect from June 10 until Aug 31 with even more lenient restrictions.
Penny stock fever
Further buoyed by the various economic stimulus packages, the low interest rate environment and loan moratorium which stretched to Sept 30, retail investors flocked the local bourse like bees to honey – digitally of course.
This was the time when many penny stocks joined the foray of glove and healthcare stocks to climb to sizzling heights.
Fast forward to recent times. The CMCO which came into effect in Klang Valley (and Putrajaya) on Oct 14 following an acute escalation of COVID-19 cases will now be extended to limiting the presence of workforce at their worksites.
According to Minister of International Trade and Industry Datuk Seri Mohamed Azmin Ali, a total 776,135 of the 3.1 million workers in the Klang Valley, Sabah and Labuan must work from home starting tomorrow (October 22) – presumably for an indefinite period of time – in line with the National Security Council’s decision.
The 776,135 workers or 25% of the 3.1 million workers are those in management and supervisory roles, based on feedback received from the industry.
It is envisaged that although the overall stock market sentiment during the current CMCO spell is very much bearish than previously (the FBM KLCI is down 17.52 points or 1.16% to 1,493.45 at time of writing), trading volume may remain brisk.
Those in the workforce who are inclined to work from home can probably turn part-time investors – assuming that they are from a higher salary scale – by capitalising on stocks whose prices have consolidated substantially.
Recall that according to data provided by Bursa Malaysia, both local and foreign retail investors accounted for 30.8% of the total investors on the local equity market from January to July 2020, up from 20.5% in the same period last year.
In terms of trading value, the same period saw value on the ACE Market surging 400% to RM252.45 bil from RM50.45 bil in the same timespan last year, while on the Main Market, it increased 87.44% to RM492.29 bil from RM262.64 bil previously.
So whether the bull will make a comeback – perhaps in a milder manner – retail investors have to be wary that they are being confronted by massive speculative or opportunistic elements that are being disseminated over the social media (i.e. companies that become an overnight glove maker or healthcare provider).
In this regard, the ultimate hope is that market regulators, too, must do their part by enhancing their monitoring and supervisory role.
Cheah Chor Sooi is the editor of FocusM. He hopes all part-time retail investors who intend to take a plunge into the stock market refrain from taking the cue from the rumour mills but are backed with adequate research and homework. He can be reached at [email protected].