Mixed views over Bursa volume

ANALYSTS and stock brokers have mixed views over the extremely high trading volume on Bursa Malaysia over the past couple of trading days.

Trading volume on Bursa Malaysia yesterday stood at 3.15 billion shares, while a massive 3.67 billion shares exchanged hands on Monday.

Since last Tuesday, the daily trading volume has surpassed the two billion mark, which is a major milestone for the Malaysian stock market.

Some are saying that the high trading volume signals real broad interest for stocks listed on Bursa Malaysia.

On the converse, others are saying that the high volume is the clearest indication yet that Bursa Malaysia, fresh from its record breaking feat in 2013, will soon be hitting the brakes.

Bursa Malaysia hit multiple new peaks in 2013, which the research community had put down to strong buying interest from foreign funds.

Foreign funds were net buyers of Malaysian equities last year, snapping some RM2.4 billion worth of equities.

However, that was still much lower than the RM13.7 billion worth of equities that foreign funds bought in 2012.

In 2013, foreign buying seemed soft on the surface but a closer look at the buying pattern showed that persistent selling in December was the major culprit.

The selling momentum has continued this year, but with foreign funds turning into net sellers, the retail market seems to have sprung to life.

"Most bull run starts with the small caps and ends with small caps... that cycle looks to be taking place now," said a stockbroker at RHB Securities.

In his view, the heavy volume helps the stock-clearing process, where the big players are able to nudge prices higher on heavy volume to clear their positions.

Mercury Securities head of research Edmund Tham said the high volume is good it as proved that there is real liquidity and genuine interest in the local stock market.