Sumatec, PDZ and Marco rebound

by **Cals** Fri 22 Aug 2014, 12:40

Business & Markets 2014

Written by Shalini Kumar of theedgemalaysia.com

Friday, 22 August 2014 09:10

KUALA LUMPUR: Shares of Sumatec Resources Bhd, PDZ Holdings Bhd and Marco Holdings Bhd made a strong rebound yesterday after plunging by as much as 28% on Wednesday.

The three stocks, together with Globaltec Formation Bhd, were the four most actively traded on the local bourse, although their trading volume was significantly less than Wednesday’s.

At the close of yesterday’s trading, Sumatec rose eight sen or 18.2% up to 52 sen, with 335.2 million shares traded.

Meanwhile, PDZ and Marco — both linked to small cap king Tan Sri Robert Tan Hua Choon — gained 22% to 36 sen and 9.5% to 23 sen respectively. Globaltec, which is linked to Sabah businessman Datuk TC Goh, continued to rise, gaining 4.2% to close at 12.5 sen, having rose 14.3% the day before.

Trading volume of the above-mentioned four stocks amounted to 915 million shares, or almost a third of total market turnover of 2.99 billion shares yesterday. Total market turnover was at an all-time high of 7.67 billion shares on Wednesday.

In a reply to Bursa Malaysia yesterday, Sumatec, which is linked to former Renong group chief Tan Sri Halim Saad, said it was not aware of any corporate development, rumours or reports concerning the group’s business which had contributed to the spike in the trading activity of its shares.

Earlier, market talk had suggested that Sumatec would soon be uplifted from Practice Note 17 status after recording two consecutive quarters of profit, along with speculation that Halim would increase his current 24.9% stake in the oil and gas (O&G) company.

When contacted, a dealer told The Edge Financial Daily that overall trading volume in the market had cooled down, but the stocks were making a technical rebound.

“If indeed Sumatec can move above 55 sen again, it may trigger another rebound of buying as trading confidence would return. However, it is highly speculative trading ... The trend seems to be that when Sumatec moves a little, the other penny stocks also seem to jump a bit,” he said.

Another dealer said that he thought the trading volatility in the market, particularly amongst the penny stocks, would continue for some time.

“I think this trading behaviour will continue for quite some time. Obviously, having counters go up and down very quickly means investors can make fast money, but it also creates a bubble in the system,” he said.

“I have a feeling that it won’t stop until the bubble bursts, but unfortunately, that will have serious repercussions on the market players,” he added.

SJ Securities Sdn Bhd senior remisier Goh Kay Chong said, however, that the frenzy was over.

“Yesterday [Wednesday], there was an investment bank that attempted to reduce margin positions on Sumatec, which triggered the selling. Today [yesterday], investors came in to support, so the stock rebounded,” he said.

“While the market recovers fast, I think the frenzy is over, although the sentiment is still bullish,” he added.

The FBM Small Cap index rose 0.52% yesterday to close at 19,080.631.

Meanwhile, Globaltec had also been issued an unusual market activity query by Bursa, but it said that it was not aware of any other reason for the trading activity other than its O&G venture.

The company recently announced a potential venture into the O&G industry, through investing in an Australia-listed energy outfit.

Across the broader market, trading volume decreased to 2.99 billion shares worth RM2.45 billion as compared with Wednesday’s 7.67 billion shares worth RM3.3 billion.

The KLCI had retreated and closed 0.22% lower at 1,874.81 points on cautious market sentiment.

“Investors’ appetite hampered after China PMI [purchasing managers’ index] data fell sharper than expected while market breadth remained negative after the heavy selldown yesterday,” said JF Apex Securities in its market report.

This article first appeared in The Edge Financial Daily, on August 22, 2014.