Penny stock thematic switches to black gold

Trading volumes hit a new milestone with total securities traded on Bursa hitting a record 27.8b units


THE shift in thematics, and rising volatility and volumes traded unscored the potential for a big swing in prices on directional trades in penny stocks that have attracted retail player interest.

Trading volumes yesterday hit a new milestone with total securities traded on Bursa Malaysia hitting a record 27.8 billion units worth some RM7.8 billion with penny stocks leading the volumes.

Sapura Energy Bhd was the most actively traded at 4.13 billion shares yesterday as energy prices hit a four-month high. Traders also rushed in Velesto Energy Bhd, Alam Maritim Resources Bhd, Bumi Armada Bhd, Hibiscus Petroleum Bhd and KNM Group Bhd.

BIMB Securities Sdn Bhd analyst Azim Faris Ab Rahim said the rise in oil and gas (O&G) stocks could be due to rotational play from growth or trending sectors such as glovemakers and healthcare to value-oriented stocks.

“The O&G stocks were battered down so heavily that most are traded at a deep discount to book value. From a trading perspective, the market could also perceive the selling as overdone and the downside to these stocks is limited,” he told The Malaysian Reserve (TMR) yesterday.

Azim Faris has a ‘Neutral’ call on the sector, cautioning investors to remain careful as the worst is not yet over.

“There is a risk that some O&G stocks may see further asset impairment which could significantly reduce the book value of the companies,” he said.

His top pick remains as Yinson Holdings Bhd on the back of long-term earnings visibility, as well as growth potential from Petrobras’ floating production storage and offloading projects tender wins.

Gold-related stocks lost their shine as the precious metal price fell below the US$2,000 (RM8,387) a troy oz level yesterday.

DailyFX head strategist for APAC Ilya Spivak said gold prices tumbled in the wake of last Friday’s upbeat US jobs data. Faster-than-expected payrolls and wage growth along with a larger drop in the unemployment rate than markets were projecting cooled bets on the US Federal Reserve stimulus expansion and trimmed inflation bets, undercutting gold’s store-of-value appeal.

“Crude oil prices are likewise on the defensive as the repricing of US monetary policy expectations to a less-dovish setting tarnishes asset anchored to the global business cycle even as it buoys the US dollar.

“The move amounts to de-facto selling pressure on the range of assets priced in terms of the go-to reserve currency on global financial markets,” he said in a note yesterday.

Gold-related stocks Tomei Consolidated Bhd and Poh Kong Holdings Bhd were among the top losers, falling 29.68% or 46 sen and 26.69% or 35.5 sen respectively to RM1.09 and 97.5 sen each.

MIDF Amanah Investment Bank Bhd head of research Imran Yassin Mohd Yusof said, while the return of retail investors is welcomed and adds buoyancy to the local exchange, their trading leads to a tendency for the market to overreact on both sides (either up or down) given that it is newsflow driven.

“The market will normally revert to its fundamentals, hence, the price corrections in some counters,” he told TMR recently.

He said the increasing trading volume on the local exchange is primarily due to retail investors returning in a big way fuelled by liquidity from the loan moratorium and low interest-rate environment.

Imran Yassin believes trading volume could continue to rise, but may taper post-October after the loan moratorium period ends.