26-04-2008 What Is SBL, Fund Manager, Share Price Movement.

The following Q&A’s are our own views; they are focus upon SBL, Fund Manager, Share Price Movement.

Q&A 01 : What are the synonyms of Stock Borrowing-and-Lending (SBL)?
Ans : SBL = Short Selling = Off-Market Trading.

Q&A 02 : Which party is legitimated to do SBL ?
Ans : Fund Managers are the only legitimate party to do SBL. In another words, Fund Managers can do the short selling; Fund Managers are the only players for Off-Market trading.

May be you would like to argue that Bursa Malaysia does not have Off-Market. Well a very close-to Off-Market status does exist or otherwise Bursa Malaysia cannot function without Off-Market.

Q&A 03 : How many parties are there in a share market ?
Ans : Two. They are Retail Traders and Fund Managers.

This is the most important question
Q&A 04 :Where did the shares go after retail traders bought in shares from the share market ?
Ans : The shares that retail trades bought in MUST go into the custodian account of Fund Managers. Retail Traders are funding Fund Managers to short sell the shares bought by retail traders to profit Fund Managers. This is the name of the game.

We believe most retail traders never realize that they are helping Fund Managers to prey on their share prices.

Q&A 05 : How many markets are in Bursa Malaysia for trading shares ?
Ans : Three. They are the Primary Market for trading IPO, Secondary Market for trading issued shares, and Off-Market for Fund Managers.

Q&A 06 : The structure of secondary market is designed for whom ?
Ans : The structure of secondary market is designed for Retail Traders only. As you can see, whenever there is a rise in share price, it means buying; whenever there is a fall in share price, it means selling. These are all from the stand-point of Retail Traders, not the Fund Managers.

Q&A 07 : Who is legitimated to move the share price ?
Ans : Fund Managers have the license to move share prices, but they have to report the movement to Bursa Malaysia and Security Commission (SC). Share price is just like the price tag of any other ordinary goods, only that share is tradable in share market alone. Large movement of share price is prohibited and requires explanation.


You may already know the answer of the above Q&A’s. But if you don’t, you are really a retail trader !!

Here is another important hierarchy of share trading information, where retail traders are always put themselves in the unfavorable situation of this information imbalance :
The most powerful decider for share price movement : Insiders;
The second most powerful decider foe share price movement : Fund Managers in Off-Market;
The third most powerful decider for share price movement : Technical Analysis.

Technical Analysis is considered more powerful in deciding share price movement than other analysis such as Fundamental Analysis simply because Technical Analysis is much more closer to revealing share price movement.