State-owned funds a new force on Bursa

State-owned funds a new force on Bursa
By Francis Fernandez
bt@nstp.com.my

STATE-OWNED funds are emerging as the biggest market makers in the stock market, buying on dips and selling when stocks are on the uptrend, filings to Bursa Malaysia show.

Their emergence as the new force comes a year after stock market syndicates were brutalised when the Securities Commission (SC) imposed trading restriction on Iris Corp Bhd, which rose 1,500 per cent from 11 sen on September 12 2005 to RM1.36 on May 11 last year.


The aftermath was a more than 20-point drop on the broader market in a single week and an investigation spanning from the US to Malaysia on Aeneas Capital Management LP, a US$400 million (RM1.4 billion) hedge fund which had positions in some of the hottest stocks here in the first five months of last year.


The lack of sustained syndicate play has allowed established funds to emerge in the forefront, helping the market set fresh benchmarks on trading volume and index appreciation this year, albeit in an orderly manner.


For example, the Employees Provident Fund (EPF) seems to have got its timing right thus far by buying stocks before it really appreciates and selling them on the downturn.


Earlier in the year, EPF was a net buyer of Malaysian Resources Corp Bhd (MRCB) shares, but sold down the shares in March.


EPF in April was again a net buyer of MRCB, the country's biggest supplier of transmission cables, filings to Bursa Malaysia show.


This month, EPF bought some seven million shares from the open market over a 14-day span to bring its total shareholding in MRCB to about 221.97 million shares as at April 19 from 215,06 million shares as at April 5.


Likewise, Khazanah Nasional Bhd's open market purchase of Faber Bhd shares this month has also boosted the share price of the company.


Faber, which was trading at the RM1.20 level, has been on the rise after the Khazanah purchase in mid-April, when it bought slightly more than six million shares from the open market.


Eleswhere, Johor Corp Bhd, the investment arm of the Johor State Government, was a net seller this month of Damansara Realty Bhd (DBhd), a property company which is a favourite among retailers on the stock market.


Johor Corp's sale seems to have taken the wind from DBhd's sail as other property stocks such as Equine Bhd and Malton Bhd have emerged in the fore front of retail investors' stock picks.


On the non-state-owned-fund-based purchase and disposal, one of the more curious ones is that of Multi-Purpose Holdings Bhd (MPHB), the parent of Magnum Corp Bhd, the country's oldest four-digit gaming company.


This month alone, MPHB bought more than 38 million Magnum shares from the open market, raising its stake in its subsidiary to 53.76 per cent or 768 million Magnum shares from 51.15 per cent or some 730 million shares previously.