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A trader told StarBiz that the interest seen among the top active penny stocks came ahead of April 30, which is the last day of suspension for short-selling activities in the stock exchange.

PETALING JAYA: Penny stocks dominated Bursa Malaysia’s most active list yesterday on the back of increased speculative interest.

A trader told StarBiz that the interest seen among the top active penny stocks came ahead of April 30, which is the last day of suspension for short-selling activities in the stock exchange.

“The buying interest could be coming from the proprietary trading desks in the investment banks. Since short-selling is not allowed for more than a month now, they are engaged in speculative buying of penny stocks to make quick gain.

“From May onwards, should the short-selling activities not resumed, I do not think the speculative interest will be as vibrant, ” he said.

The top three active stocks were Xidelang Holdings Bhd, SAPURA ENERGY BHD and Key Alliance Group Bhd.

On March 20, the Securities Commission and Bursa Malaysia announced that short-selling has been suspended until April 30 to mitigate potential risks from the heightened volatility and global uncertainties.

The temporary suspension applies to intraday short selling and restricted short-selling as well as intraday short-selling by proprietary day traders. However, it does not apply to permitted short-selling.

Yesterday, the broader Bursa Malaysia began the week on a mixed note as 469 advancers trumped 396 decliners.

A total of 350 counters remained unchanged. Turnover was 5.18 billion shares valued at RM2.24bil.

The benchmark FBM KLCI rose marginally by 0.31 points to 1,370.16, off the intra-day high of 1,378 points.

Despite a stronger increase in the morning session, the index pared all its hard-earned gains to close only marginally higher following late selling of Tenaga Nasional Bhd and Petronas-linked stocks.

The marginal gains registered by FBM KLCI was in stark contrast with the key Asian markets which posted firmer gains, reflecting the carry over of the weak investment from last week.

On the previous trading day last week (April 24), FBM KLCI fell by 11.79 points to 1,369.85 after the movement control order (MCO) extension cast a pall over the economic outlook.

The recovery in global crude oil prices also helped to boost investor sentiment yesterday.

The international benchmark Brent Crude stabilised and closed at US$20.49 per barrel.

As a result, this has upped the demand for the ringgit, pushing the local note to RM4.3517 against the US dollar.

Year-to-date, the ringgit has weakened by 6% to the greenback.

According to AxiCorp chief global markets strategist Stephen Innes, the ringgit has a relatively strong correlation with oil and global risk sentiment.

“Despite the adverse short-term effects from the extended MCO, the ringgit should continue to find more sound footing thanks to the calming effects of stable oil prices, ” he said.

Commenting on the ringgit’s outlook, Kenanga Research said in a note that the currency could remain under pressure due to oil price volatility and rising demand for the US dollar.

The extension of MCO by another two weeks was also expected to drag the ringgit down on the back of slower economic activity.

“In contrast, US dollar is predicted to strengthen this week, driven by the rising demand of US dollar due to the failure of Covid-19 drug test and negative outcome from the recent European Union (EU) summit meeting

“Exponential Moving Average sees the ringgit losing its momentum against the US dollar this week, to decline 0.06% to 4.365 from its closing price of 4.363 last week, ” stated the research house.

Meanwhile, in a separate development, MIDF Research said that foreign funds disposed of RM1.13bil of local equities in the April 20-24 week, marking the highest outflow in five weeks.

“In comparison to its other six Asian peers that we monitor, Malaysia remains as the nation with the third smallest foreign net outflow on a year-to-date basis.

“The year-to-date foreign outflow from Malaysia came to RM10.21bil, ” MIDF Research said in its weekly fund flow report.

In terms of participation, the research house pointed out that foreign investors saw an 8% weekly increase in its average daily traded value (ADTV), the smallest among other investor groups.

Nevertheless, the absolute ADTV of foreign investors remained healthy above the RM1bil mark.

https://www.thestar.com.my/business/business-news/2020/04/28/speculative-interest-drives-penny-stocks

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