Saturday, August 4, 2012

EPF, KWAP, TH on FGV: The big 3's position

I wanted to have a feel on the largest national funds with regards to their holdings on a company which can be thought to be controversially supported - FGV.

Let me show the table which I have prepared. As you can see the three funds:
  • EPF started with 5.06% holding, now after 1 month owns 5.65% of FGV;
  • KWAP started with 5.30%, by 26 Jul it increased its holdings to 6.33%;
  • Tabung Haji started with 7.55%, 1 month later reduced slightly to 7.49%.
  • As for share price, FGV opened at RM5.30 on 28 June, latest was RM5.12 (for the period in review).

Now, you see that as the share price of FGV dropped, the funds continue to increase their holdings especially from mid July. It is not wrong to buy as shares continue to drop, but this I think is not the case here. Currently, the three funds hold in excess of 19.3% of FGV from the initial period of below 17.9%. As EPF has proven to hold more than 10% of many Bursa Composite companies, I will not be surprised that it will continue to increase its holdings.

Now the question is whether these purchases allow some to sell especially the huge list of MITI's holders? Currently, palm oil stocks are on the slide due to potential weakening of crude palm prices but this is not the case here. Many of the shareholders of FGV at the moment are just not the believers type (and they were just doing trading) and I have the suspicious mind that these funds are doing their best to not let it slide much further.

Do you know why I am not supportive of these funds being heavily involved in Malaysian stocks?


富升 said...

can you share why you don't believe in this 3 funds?

I notice when EPF sell YTL, ater that the share price increase.

felicity said...


First of all it is difficult to know how much these funds are involved in the much larger cap stocks in Malaysia except for continuous tracking of EPF's trades in Bursa. It does come out with quarterly report (only Top 30) which you can get from its website but pretty much EPF does a lot of buying and selling.

I am not against EPF in terms of its involvement in purchasing of stocks but the quantum that EPF or any other Malaysian held funds are involved in is tremendous.

I have done a piece where EPF alone is holding more than 15% of Bursa Malaysia's stocks in total market cap. That's huge for one fund. Hence, if that happens, the tendency for EPF, KWAP to move the market is huge. It can basically dictate the market if Malaysia's free float is in the range of 30% to 40%.

If one fund is in such huge control of the market, the stock exchange will suffer in the long term as market liquidity is only made by one or two funds.