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 Top Glove Investment: Is the EPF trading or investing?- Truth


Reference Article @ 2010: Ang has 20 years’ experience in research and investment. He is currently the chief  investment officer of Phillip Capital Management Sdn Bhd.

Note: https://www.theedgemarkets.com/article/follow-%E2%80%98smart-money%E2%80%99

Purchases by the EPF

The Employees Provident Fund (EPF) is the largest local equity investor in our stock market. It was reported that the EPF accounted for as much as 50% of the total traded volume during certain periods. Since the EPF is a large player, its actions have far-reaching impact on prices of many stocks.


Since most of its investments exceed 5% of the stock’s paid-up capital, the EPF make regular disclosures on their purchases and disposals. Sometimes, investors are puzzled why the EPF trades regularly between buy and sell.


The presumably unclear direction of trades is because the provident fund also appoints external fund managers (EFMs) who have the full discretion to buy or sell. As such, sometimes the EPF could be buying a stock but their EFMs could be selling the same stock on the same day.


In certain cases, one EFM buys but another EFM could be selling at the same time or a few days later. Hence, the disclosure by the EPF is a combination of trades by its internal fund managers as well as that of EFMs.


Due to the difference in opinion between the EPF and its EFMs, there is no clear signal of the direction of this powerful domestic fund. The fund could be big, but they are not “united” and they are in fact competing with each other. This is also a way to generate liquidity in the market. As such, relying on the trades of this “smart money” for direction may not be very reliable.


Even if the fund is buying a particular stock persistently, we observe that the stock price may not seem to rise substantially. This may be linked to the way the orders are placed — that is, they tend to buy lower after a completed trade. This is different from the trading style of foreign fund managers, which we shall discuss later in this article.

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