‘Investors should listen to licensed advisers‘
KUALA LUMPUR: Investors should make more informed investment decision when investing in the capital market, as possible return of the bull market might also have its negative side.
MIDF Research deputy head Mohd Redza Abdul Rahman said with growing concern of “pump and dump” activities on Bursa Malaysia circulating through social media, such trends would also have an impact on behaviour when came to investing.
“Investors should always take advice from licensed advisers and the signals provided through financial fundamentals, such as financial statements, news flow and other credible source of information,” he said.
On the “pump and dump” activities, Mohd Redza, who is also previously part of Bursa Malaysia’s marker surveillance team, said such activities usually involved penny stocks or small mid-cap stocks that had minimal or no analyst coverage.
“When the market is hot, investors sometimes tend to follow the herd and make uninformed investment decision, resulting in irrational exuberance in the market, where stock prices are driven beyond their fundamentals and in absence of positive corporate developments that warranted a drastic price rise,” he told NST Business yesterday.
He said Bursa Malaysia, being the front-line regulator in the equity market, was doing its job to ensure a fair and order market, so that investors whether local or foreign had good perception of the local capital market as their investment destination of choice.
“The rising optimism on the capital market will also coincide with the rise of ‘unlicensed’ investment advisers providing so-called investment tips to entice investors to flood into certain counters of interest, buy- ing at high prices, and at the same time, pushing the prices higher — often ignoring the absence of positive news flow and catalyst that would support the companies’ financial fundamentals.
“And when the price declined, it is the laymen investors who get caught with significant paper loss,” he said.
It was reported that Bursa Malaysia has detected “pump and dump” activities circulating through the social media, which would typically begin by spreading false or misleading statements, news or rumours in investor blogs and chat groups to entice or recommend unsuspecting investors to buy stocks which are touted as “hot” picks. Farah Adilla
Mohd Redza Abdul Rahman