Stock market gains likely to have contributed to sales

HAS gains from the stock market help developers to pick up some sales?

A small contractor-turned-developer says “yes”. Government measures also help to give it that push.

Carmelo Ferlito, a senior fellow from The Institute for Democracy and Economic Affairs prefers to keep the bubbling equities and the property market separate.

An analyst who wants to remain anonymous says “it is possible” for gains made on equities to be translated into property sales.

“When the stock market performs well, money could flow into the property market as alternative investment option.

“Maybe that is why property sales seem so disconnected with the poor economy,” she says.

Government easing policies will also help in buying sentiment, she says.

Sales (in the property market) picked up only in June, after the movement control order (MCO) was relaxed somewhat, and after the government introduced various policy easing measures with the re-introduction of the Home Ownership Campaign (HOC), she says.

HOC came with stamp duty waivers and rebates from developers.

The government also increasing lending to 90% from 70% for the third property purchase.

It is clear that the stock market is behaving better with Covid-19 pandemic and there is too much liquidity in the system.

On average, over a 10-year period, the average daily trading volume has hovered largely below four billion shares between 2010 and 2020, according to Bloomberg.

Trading picked up in March. The MCO kicked in on March 18.

The biggest jump was in April. The initial six-month loan moratorium kicked off on April 1.

Glove stocks generated much interest due to the pandemic initially. Then came the interest in penny tech stocks.

It was a retail investor-driving liquidity which shifted interest from glove and healthcare-related stocks since the rally in mid-march, to technology stocks.

The interest was in small and mid-cap stocks, where the fast money belonged.

The flood of liquidity in Bursa Malaysia pushed the trading volume above the 12 billion-mark for the first time in history on July 20.

Will there be a pullback after Sept 30, even with the three-month loan moratorium extension announced on July 29?

How will the equities market be impacted with the snap polls in Sabah?

The macro picture is far from rosy.