KUALA LUMPUR (May 13): Trading patterns on Bursa Malaysia may be increasingly influenced by the differing market experiences of three generations of investment professionals, according to AmInvestment Bank’s analysis of 258 fund managers, analysts and senior decision-makers across 12 financial institutions.
The study, which cross-referenced career entry periods with 25 years of KLCI and sector index performance data, suggests that capital allocation is shaped not only by fundamentals, but also by the market environments in which investors are trained.
It identified three broad categories that collectively influence institutional decision-making: senior investment leaders, mid-career fund managers and younger analysts.
Its study found that senior investment committee members and chief investment officers, many of whom began their careers during major downturns such as the dot-com crash and the 2008 Global Financial Crisis, tend to prioritise downside protection and capital preservation.
Their experience of severe market drawdowns has led to a stronger focus on earnings stability, balance sheet strength and governance quality when evaluating investments.
Within institutions, this group often serves as a risk control layer, particularly during periods of strong market rallies.
AmInvestment Bank said in a note on Wednesday that fund managers who entered the industry after 2010 operated in a period defined by low interest rates, abundant liquidity and relatively fast recoveries in risk assets.
The study found that this group showed a stronger preference for growth and technology-related sectors, where market pullbacks have often been followed by strong rebounds during their careers.
As a result, they are more likely to rotate into technology and high-growth stocks during market weakness and participate in liquidity-driven rallies.
A younger group of analysts, with a median age of around 28, entered markets during a period dominated by thematic cycles such as artificial intelligence, cryptocurrency volatility and semiconductor-driven rallies.
In Malaysia, many were also shaped by the 2020 glove stock boom and subsequent collapse, one of the most extreme sector cycles in recent history.
The study suggested this group may contribute to more globally thematic investing styles, higher tolerance for valuation expansion and faster shifts in sentiment-driven trading.
However, it also noted that exposure to rapid boom-bust cycles may lead to shorter investment horizons and quicker exits when market momentum fades.
AmInvestment said the implication is that market leadership may increasingly reflect generational investing habits rather than just fundamentals.
Early in a rally, money tends to flow into growth stocks because many fund managers have been rewarded in that segment before. But as liquidity weakens and scrutiny increases, leadership often shifts to stronger companies with stable earnings, solid balance sheets, pricing power and steady cash flow.
“The best strategy may be to trade what fund managers are conditioned to buy, but own what investment committees are ultimately willing to defend,” it said.