KLCI - Had The Bad Day Over?

KLCI index closed at 1,532.12 on last Monday. Then it rebounded 4 days consecutively, 80.60 points and closed at 1,612.74 today. It seems like the market had recover and the bad day had over, isn’t it? However, KLCI index only represents 30 top blue chip stocks in Bursa and does not represent the whole stock market. It means that as long as most of the 30 stocks move up, the index will follow too.

	8/24 Mon	8/25 Tues	8/26 Wed	8/27 Thurs
Foreign, RM	-378.8	-337.8	-301.4	-9.0
Retail, RM	-6.5	-15.1	-13.0	-30.1
Local Institution, RM	385.3	352.9	314.4	39.1

Have a look at the above Daily Trading Participants and you will know what am I trying to say. Even though KLCI index rebounded 80.60 points over the past 4 days, but the foreign investors are still pulling out their fund everyday! They had net sold for 4 days continuously and for the first three days, they pulled out RM1.018 billion! Same as retail investors, they had also net sold for 4 days continuously. Local institution is the only one who supporting the stock market! But, how long can they support and how much money can they keep pumping in?

I believe the local institution which supporting the stock market are government linked investment companies, such as Khazanah, PNB, EPF, KWAP, Lembaga Tabung Haji, etc.. It’s one of the methods that the government tried to prevent the stock market from falling further down. They also wanted to boost up the retail investors’ confidence to continue invest in the stock market.  Besides, the National day is just around the corner, so probably the government is trying to turn the situation around temporarily. However, the overall picture shown that either foreign investors or local retails investors is still pulling out from the stock market. The rise of the KLCI doesn’t mean the market had recovered. I strongly believe it was just technical rebound!

Another weird things that strengthen my thought was today PUT warrant price action. There are currently 23 PUT warrants in the stock market. I picked 3 of them to show. Have a look.

 FBMKLCI-HK

 FBMKLCI-HT

FBMKLCI-HW

Did you guys spotted the similarity between them? FYI, KLCI index rose 11.04 points today. However, this three PUT warrants moved at the opposite direction and closed at a higher price compared to yesterday. Each of them started off at a very low price during market opened and then moved up at the last hour of market (开低走高)! Why is it happened at the last hour of market? The only reason I can think of is many investors expect the KLCI to drop on next week! It is not a good sign!

Nobody will know what will happen to the stock market on next week. Tomorrow is Perhimpunan Bersih and the coming Monday is National day. These two important days will have a significant effect to the stock market. As a conclusion, so far foreign investors are still pulling out from Malaysia. Without them, Malaysia stock market will still remain weak. I do not see any sign of recovery yet in the economy even though MYR had slightly strengthened today. Therefore, I still remain pessimistic with the stock market.

Is this the eve before thunder storm? 暴风雨的前夕?  I HOPE IT IS.

Just for sharing.