Bursa Malaysia new Tick Size
Filed Under (Bursa News) by Webmaster on 04-08-2009
Tagged Under : Bursa Malaysia, tick size
The smaller tick size which took effect yesterday did not have an immediate impact on the local bourse, as it stayed quiet with investors mainly on the sidelines, research and investment experts said.
The tick size is the minimum price variation between the buy and sell price for a stock. This means that the minimum price change of listed securities is now smaller.
The FBM KLCI slipped 3.59 points to close at 1,171.31 with 795.2 million shares worth RM1.225bil traded.
TA Securities head of research Kaladher Govindan said the effects of a smaller tick size would be fully felt in a more active market.
“Investors are quiet as they expect a correction in the local bourse as valuations are seen as pretty expensive currently.
“Once that happens, the benefits of a smaller tick size will come into play, especially for the bigger players, such as the institutional and high net-worth investors who tend to buy the more expensive stocks as they will now have better flexibility in buying and selling their stocks,” he said.
A head of dealing with a local stockbroking firm said the quiet market could partly be attributed to the implementation of the smaller tick size.
“Investors are not familiar with the system so they wait to see what the impact is on the market. It was just like the first day of trading when the FTSE Bursa Malaysia KLCI was implemented last month,” he said.
Nevertheless, he added that there was still interest in blue chips, such as Malayan Banking Bhd, Bumiputra Commerce Holdings Bhd and Genting Bhd, especially by institutional investors based on the price movements and volumes yesterday.
The Association of Remisiers of Malaysia president Sam Ng noted that institutional funds had stayed on the sidelines yesterday.
“When we look at our screens, the buyers and sellers’ lists are short. Volume is also quite low in the market today.
“I believe institutional investors may be trying to adjust their dealing method to suit the smaller tick size,” he said, adding that retail investors were also quiet.
However, he did not expect investors to stay away for long as the smaller tick size ensured a more stable composite index which would benefit investors.
Fortress Capital Asset Management (M) Sdn Bhd chief executive officer Thomas Yong said the smaller tick sizes encouraged traders to come into the local market.
“The smaller tick size will ensure that there are some movements/fluctuations in share prices, however small, to generate interest among investors.
“The smaller tick size will benefit some stocks, especially those with thin volumes,” he said.
Yong also did not expect Bursa’s new board structure (where the main and second boards have been merged to form the Main Market, and the Mesdaq market changed to the ACE Market), to have any effect on the performance of the local bourse.
