Retail investors

THE current stock market run, dominated by interest in stocks claiming to benefit from the coronavirus outbreak, has a strong retail participation.

Retailers made up around 40% of total trades this week, with daily buying in the region of between Rm1.5bil to Rm2bil. But the amount retailers are selling is similar to their buying, indicating a large presence of day traders.

No wonder Bursa Malaysia Bhd shares are up around 10% this week alone, likely due the increased trading volumes.

Where is all this money and interest coming from?

After all, shouldn’t investors be worried about the looming economic slowdown, if not a global recession of epic proportions?

One wonders if the high retail participation on Bursa Malaysia has got anything to do with the fact that punters have not been able to make their track up to Malaysia’s only casino in Genting Highlands?

This is because the casino is still closed under the conditional movement control order (CMCO). Recall also that all number forecasting operators have ceased their operations. So there is a possibility that some of the liquidity that used to flow into those betting outlets have found their way into the stock market.

If so, it is hoped that these investors take the time and effort to analyse more the background of the companies they invest in. Investors ought to keep track of developments in those industries and company’s earnings numbers as well as the guidance that they sometimes give.

Reading analyst reports is also a good idea along with keeping abreast of daily news flows from credible sources. One final piece of advise: buying companies when they are trading relatively cheaply is a cornerstone of long term investing.