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Characteristics of the Malaysian Market.

Thought of creating this thread as I was just having a chat about it with @FIRLGuys yesterday. I believe this can be an important topic for begginers and even the senior traders and investors (including myself) so everyone can better equipped and acustomed themselves as to what's to come in this unique market and make better investment / trading decisions!

An example of one of the more common characteristics brandished around is the notion of (1) "Malaysian tech stocks" is "memang always valued at premium" - this is due to local funds having no where to go... I believe this is definitely one of it.

So lets discuss and Please do follow up in this thread if you guys have any futher thoughts!

To kick off the thread, I'll come up wf another which is abit less obvious especially if you have not traded in other markets. (2) Access to "earnings focused" fundamental data.

We all know that data is important. In Malaysia I'd consider 3 very important sites / portal / app which are both free and easily accessible. malaysiastockbiz, i3 (not the community) and klsescreener. They're great websites and app especially pertaining to collection of organised data. However, have you ever wondered where they get the data displayed? And if they need to pay for it? The quick answer is that - it seems that they get their collected data mainly from the Bursa summary page or the "SUMMARY OF KEY FINANCIAL INFORMATION". A quick look at the attached image will show the direct link on why these places always have the common headers, why in terms of features such as screeners it's based on a select few criterias readily formulated to calculate information derived from this.

The general metrics are Revenue, PBT, Net Profit, EPS, Div, NTA. It's very earnings focused.

So what's the problem? The problem is that, these set of easy and organised data breed retail analysis which focuses too much on "earnings", with high emphasis on PE ratio, on Margin. Some others will focus on dividends and on NTA. While this is not all bad, over reliance on earnings is also not so good as - earnings can easily be manipulated (there's a stock in Stockbit we heavily discuss doing this) and focus on earnings means that you will skip a huge part of the business as a whole.

There are tons of articles online, and even @FIRLGuys made a good video on "PE Ratio", so do look up on the problems with too much focus on that - but generally - PE ratio ignores debt, ignores collection, and cash flow / FCF generation and utilisation, ignores future potential from a business standpoint and so on...

This led to many retail analysis in Malaysia for instance - will value concession companies by way of PE ratio instead of... say DCF models; value conglomerates by way of PE ratio instead of... SOTP valuation, and so on.

Something to ponder about!

So coming back to the topic, what other characteristics of Bursa Malaysia can you think about? :)


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