‘In­vestors should lis­ten to li­censed ad­vis­ers‘

New Straits Times - - Business -

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

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