🎯 Everyone knows that the reason for the recent decline in Malaysian stocks is due to foreign capital massively selling Malaysian stocks. This started in the second half of last year and has been continuously selling, with a more intense selling action this year, resulting in a more significant drop in Malaysian stocks this year.
🎯 BURSA divides investors into three types: foreign investors, local institutions, and retail investors. If foreign investors continue to sell, the other two must take on the buying responsibility because the stock market is a zero-sum game, meaning the number of stocks bought and sold must be the same.
🎯 The significant difference between foreign capital and local Institutions plus retail investors is that local Institutions plus retail investors generally only Hold Malaysian stocks or Cash, and rarely invest in Other investment tools or markets. In contrast, foreign capital has many choices; they can invest in Stocks from other countries if they do not invest in Malaysian stocks. This means that the Sell-off by local Institutions plus retail investors is usually short-term because they do not choose to keep Cash for long, but the withdrawal by foreign capital can be long-term since the funds can be invested elsewhere.
🎯 Therefore, if the stock market is described as a reservoir, there were originally three pipes responsible for injecting funds into the Malaysian stock market, but now one of the pipes has turned into a pump, drawing water out of the reservoir, leaving the other two pipes struggling to support.
🎯 After the foreign capital leaves, only local Institutions and retail investors remain in the Malaysian stock market, so retail investors need to be cautious. In the short term, the stock market is a zero-sum game; local Institutions cannot earn money from foreign capital and can only target retail investors. Besides buying low and selling high to make profits, local Institutions can also Short Sell.

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