Airasia [5099]: Looking Into The Shareholdings of Institutional Funds

In my previous post, I explained why I was expecting Airasia’s share price to drop to the RM2.50 or RM2.30/ RM2.20 level before rebounding. The development of the price movement in the past 2 weeks, however, had caused the formation of an inverse-head-and-shoulder increasingly likely. The small reversal on the 8th of February with increased volume could be a signal for trend change. The support level at RM2.63 seems plausible since it was the lowest level being traded when the market tumbled in 2011 (as highlighted in the chart).

airasia general

But is it a confirmed trend change, or could it be just a bear rally? To answer this question, we need to look deeper into the activities of both the institutional funds that are involved in this counter.

I used red and green arrows to represent disposal and acquisition of shares by institutional investors. Down arrows represent trading activities of Wellington Management Co. while up arrows represent trading activities of EPF. The length of each arrow indicates the relative traded volume on each day with the shortest red down arrow serves as a benchmark of 1million shares. Only acquisitions or disposals in excess of 500,000 shares a day are shown in the graph. All the trade details are obtained from Bursa Malaysia’s website.

airasia - wellington2
As we can see, the variation of the Bullish Belt-Hold Line that happened on the 8th and 13th of February was not well supported by institutional funds (No huge acquisitions by either of the active funds). The huge traded volume was merely a transfer of shares from Wellington Management Co. to retailers or other small institutional funds. This is a sign of bearishness and indicates a possible short-lived rally. Still, there is a chance for a trend change as long as Airasia’s share price manage to breach the immediate resistance of RM2.72 and stay above the level in the next few days.

The biggest worry at the moment, however, is still our upcoming election, which is expected to bring all shares down to lower levels. So be cautious.

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