Trading value hit RM67 billion in December 2013

by **Cals** Wed 29 Jan 2014, 08:14

Posted on 29 January 2014 - 05:38am

Liew Jia Teng
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PETALING JAYA (Jan 29, 2014): December 2013 was an interesting month for Bursa Malaysia as its total trading value increased sharply by 66% to RM67.5 billion, compared to RM40.7 billion a month ago, denoting an appetite for blue chip stocks in the run up to the end of the year.

The higher trading value was at odds with total trading volume which had dropped by 19% to 30.3 billion shares, down from 37.7 billion shares traded in November last year.

Market experts call the trend "abnormal", but said it comes as no surprise, as the year-end is commonly known as the window dressing period.

"The statistics in December is quite abnormal compared to the past few months. When the trading value goes up but the trading volume doesn't, it shows that not many participants were actually there,"JF Apex Securities Bhd head of research Lee Chung Cheng told SunBiz.

The spike in trading value was mainly due to window dressing activity in the year end, as fund managers restructured their investment portfolio, which involved some large-cap stocks.

He added that the participation of the local institutional investors was higher in December lifting the stock market, especially the index counters, to go up substantially.

Participation of local institutions in December was at 40.2% in terms of value, ex-direct business transactions.
However, Etiqa Insurance and Takaful Bhd head of research Chris Eng Poh Yoon told SunBiz that window dressing activity may contribute to the stock market rally but it can never be proven.

"The increase in trading value while the trading volume decline can only show that investors have traded the shares that carried hefty price tag, but that is not the proof of window dressing activity," he said.

When market investors focus on penny stocks, trading volume tend to increase but trading value does not. Hence, the higher trading value and lower trading volume in December, show that most market investors were trading blue chip counters, Eng explained.

At 67.5 billion trading value in December, the value of shares traded were the highest in a month for the year. In May 2013 trading value hit RM60.4 billion. Trading volume for December however, was the lowest level since May 2013.

Another anomaly as it is called, showed that direct business transactions in shares hit RM35.8 billion of total value traded in the month.

"Some funds might want to buy a big chunk of shares from the company owners and they choose to go to off market so that the share price wouldn't be affected," Lee said.

TA Investment Management Bhd executive director and chief investment officer Choo Swee Kee noted that the high level of direct business transaction is "a little bit unusual", without elaborating more.

"We don't know who and we don't know why they have to make all these off market transactions in December. We wouldn't know why," he said, saying that the matter is confidential .

As at Jan 27, 2014, some RM33.4 billion worth of shares have been traded, with 29.1 billion shares changing hands.