Friday, October 21, 2011

A 66 Points Mistake

How to energise the whole market? By doing a huge mistake on possibly 10 index stocks. This is the grapevine, so don't hold me to this. It is common place for foreign brokers to put "market on close" (MOC) orders, usually to cover the futures positions or something. It could be sells or buys, a hedging strategy.

IOI Corp went down from RM5.00 to RM3.75 in the blink of an eye around 4.40pm. Same goes for Sime Darby which went to RM7.00, you can also check on Petronas Gas, DIGI, IJM ... KLK was super for those who got it at RM15.00. Those who have strong queues on the buy side may only see minor dislocation in their prices. The more illiquid ones got whacked.

Someone probably wanted to go home early and just hit market sell at 4.40pm, a genuine mistake and a timing issue, should be at 4.45pm ... maybe a new expat VP sent to cover Malaysia markets as senior trader
 ; ). Instead of happy hours, he/she can drown his/her sorrows and can expect to have a nicely brewed coffee at the SC on Monday.

This event did affect many other highly traded counters as buyers shrivelled on seeing the 66 points drop, and people who were long also dumped first before asking questions. Sigh ...


Kingsmen said...

a 70 pts one minute drop show...sometimes i wonder why these people would want to do such unneccessary key-ins at ridiculous price spreads...hands must be crazy

Mohammed said...

Bursa plays bungling games,
China companies play accounting games,
Europe plays waiting games,
USA plays printing money games.

solomon said...

Unhappy broker or erroneous key in? Seemed like someone is testing the system or Authorities.....

It is a 67 for the Dealer, 168 for the buyer and 69 for the brokerage firm???

snowbreeze said...

The fellow who buy IOI Corp at RM3.75, what will happen?
Hit lottery? Laughing to the bank?
Learn some things today, will start queuing at 30% below actual price, nothing to loss :D

Kingsmen said...

trades keyed in by credit suisse, a foreign based broker....someone must have know the exact lowest selling price for such ridiculous price to be transacted. Bursa must check all the trading accounts (esp the buyers) for these dubious transaction for insider trading.

snowbreeze, the fellow who bought let say ioi at 3.75 now should be pissing in his pants. Why? How would he know that ioi will be sold down at this price? I would say the concerted parties are in deep trouble. Unless everything is swept under the carpet....msia boleh

hng said...

Hi Dali,

What do think about Eng takeover by TYK at 2.50? I've notice that Eng major shareholder; Teh Eong Liang, former CEO of Eng is selling its stake through open market so much so until he ease to be substantial shareholder <5% now and will likely to continue dispose off share now, already seek intention to deal with share during close period

As Teh Eong Liang (from 6.31% to 4.73% now)is brother to current to CEO Teh Yong Khoo (9.98%)and son of Low Yeow Siang (13.24%), which collectively is shareholder of TYK, a party to takeover Eng at 2.50, it is thus highly unlikely now that the takeover will be abort soon.....if not, what could be possible reason for selling stake at current low level?

hellthy correction said...

Lei Shing hong investment ltd the people behind this company is acquiring hapseng at an unnoticiable pace BUT the recent 100m @1.54 purchase raising its holding to 11% sure is going to raise more eyebrows...something is cooking somewhere in some melting pots

Lefteris Loh said...

I don't think the market plunged was solely due to the brokerage firm erroneous key in. Every trading via internet needs confirmation, password and re-confirmation. Who the hell on earth has such a blur vision?

What I think the sudden market plunged was due to transformation of system of floor trades matching buyers and sellers which has been replaced by machines that process trades automatically,speeding the flows in mili-seconds. Thus, sometimes cause an unexpected volatility that roiled the market.

You and I know that many brokerage firms have computers that are buy or sell orders based on variety of things that happen in markets. Some of the trigger are set off when a stock drops or rises a certain percentage.

This abnormal trade had occur in many countries. Two years ago, the trader at trading floor watched the DJ plunged almost 1,000 points before reversing it in 10 minutes.

emacro said...

May 6 is the 'flash crash' for US equity market, Oct 21 is the date for the Msia 'flash crash'.