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QuestionsCategory: MiscellaneousCounters with low transaction volume
P_Tan asked 4 years ago

Hi Victor/Rusmin, 
The objective of the investment quadrant is to identify companies which are good in all 4 quadrants yet price is below intrinsic value. This usually happens when not many people are aware of such companies and that’s where we should start buying the stock. And I believe such counters usually have low transaction volume and hence lower liquidity.
What’s your view on this pls?

2 Answers
Victor Chng answered 4 years ago

Hi PF,
 
Most of our best gainer are from companies that are low trading volume. Market works in a supply and demand way. If there is lots of supply (Volume), then you need a lot of demand for the share price to move up but if the supply is limited hence a little demand will push up the share price.

PF_Tan replied 4 years ago

Thanks victor. I noticed one possible reason for the low transaction volume is because very low proportion of the shares (eg < 20%) is owned by retail investors. I see that the rest are largely owned by the parent company, the management and some brokerage firms. Is this the norm and we should be of no concern?

Victor Chng answered 4 years ago

Hi PF,

It is very common in Asian companies.