Investing: Making sound investment decisions using data

This article first appeared in Wealth, The Edge Malaysia Weekly, on February 28, 2022 - March 06, 2022.
Investing: Making sound investment decisions using data
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If data is the new oil, then Lim Kok Eng, co-founder and CEO of DiBots IT Solutions Sdn Bhd (DiBots), may well be in for an exciting ride ahead. Launched in early 2019, the financial and market data provider already has about half of the brokerage firms in town on its clientele list. 

Philippe O Piette, chairman and CEO of the Chicago-based financial database provider World’Vest Base Inc (WVB), is a co-founder and key investor of the company and Bursa Malaysia is its business partner.  

Just how powerful is DiBots’ platform in the local market? Lim says it is a combination of the Bloomberg Terminal, Standard & Poor’s Capital IQ and more. 

He says the Bloomberg Terminal specialises in market data, including share prices and trading information, 

whereas Capital IQ focuses on the financial data of public-listed companies. DiBots covers both data sets by leveraging the resources of WVB and Bursa Malaysia.

In addition, DiBots maps out the relationships of the directors and key shareholders of each publicly listed company by scraping data from annual reports online. With round icons dotted across the blank screen and lines connecting one to another, light is shed on the web of the shareholdings of directors, key individuals and companies.

In a simple demonstration of its software, Lim shows Wealth that DiBots users can click on those icons, which look like M&M chocolates, to check out basic and publicly available information of the key figures of these companies. 

"Information transparency plays a vital role in helping retail investors avoid pitfalls and traps in the market.” - Lim

DiBots also keeps a database on politically exposed persons, says Lim. “This data [of individuals] is available only to institutional investors, however, and not to individuals, as it can be quite sensitive.” 

There is more. DiBots shows information on private companies in Malaysia, Thailand and Vietnam and traces their share ownerships back to their holding companies. The data — including their financial performance, and the identities of their CEOs and CFOs — is purchased from the Companies Commission of Malaysia and provided by WVB. 

The demographic data, provided by Bursa Malaysia and integrated into DiBots, is another potent tool for investors and companies to assess trading activities. It shows the types of investors — whether retail, institutional, foreign or nominee — that trade the shares of a particular company over a given period. 

DiBots also provides details about the specific trading activities of a particular company, including contra trading and short selling, says Lim.

Located in Bangsar and staffed by a nine-man team, the company generated a revenue of more than RM1 million in its first two years of operation. The number might not be huge, but some businessmen and financial industry players especially value the database and integrated platform of DiBots. 

“During my first [product] demonstration to a public-listed company, I was asked whether DiBots was open to new investments. A head of research of an investment bank who recently joined another bank also contacted me for lunch to access DiBots’ services.

“Our company is not accepting new funds for now, though,” says Lim. 

Expertise in accounting and IT

A key reason that some people are keen to invest in DiBots is Lim’s unusual career path, which combines accounting and technological expertise. 

Upon graduating from Monash University in Australia with a double degree in accounting and computer science, he joined Arthur Andersen as an auditor before becoming an investigator at Bank Negara Malaysia’s investigating department. 

“It was during the height of the Asian financial crisis, and we would take all the computers of some banks, retrieve all their data and rebuild their book. I investigated things like illegal deposit-taking and other illegitimate activities,” he says. 

In 1999, Lim quit the central bank and subsequently joined Bursa Malaysia for five years to manage its data and indices. One of his achievements was the conversion of the FTSE Bursa Malaysia (FBM) Top 100 Index — which tracks the share prices of 100 local companies to indicate local market performance — to the FBM KLCI, which tracks the performance of 30 component stocks. 

After his time as Bursa Malaysia’s head of exchange market data, Lim joined the Securities Commission Malaysia (SC) for a decade, where he was again responsible for data centralisation and dissemination. 

During his stint at SC, he had the idea of launching DiBots. “I found collecting data quite a painful exercise across various organisations. We had to subscribe to many different platforms to download them before performing analyses. I thought it would be good to have a one-stop platform for all [data]. That’s how I had the idea of venturing out,” he says. 

Lim was the general manager of SC’s analytics department before leaving the regulatory body to launch DiBots. The opportunity came when he floated his idea to Piette, whom he knew through work, to establish an integrated platform. It would contain a comprehensive set of data that caters for the needs of investors and businesses and provide them with valuable insights to aid them in making investment decisions. It could also save them from spending significant amounts of time on research and analysis. 

“He is a data wholesaler and liked the idea. That was when we got started,” says Lim.

Making data available to retail investors 

For now, DiBots’ clients are mainly institutional investors and professional traders, but it aims to open up part of its database to individual investors to help them make better investment decisions. 

To illustrate, Lim cites the example of the share price of an automated machine manufacturer that skyrocketed to a peak of over RM7 last June, from about 13 sen a year earlier. The phenomenal rise in its share price left retail investors scratching their heads, wondering what had transpired behind such a rally. There was talk that the company had received orders from one of the largest electric vehicle manufacturers in the world that is based in the US. 

How can investors assess the reliability of the rumours and justify the rally in the company’s share price? Lim says it is possible, to a certain extent, if they have access to market and financial data. 

“There wasn’t much news when its share price hit an all-time high. People were wondering whether it was a pump-and-dump tactic deployed by market manipulators.

“If retail investors have access to data, however, they can see that local institutional investors are buying the company’s shares. They can take some comfort in knowing that there is some [basis for] its growth prospects, as institutional investors tend to invest for the long term based on fundamentals. They can also dig [deeper] into the company to verify the rumours.” 

Similarly, there are companies whose share prices rallied but were mainly pushed up by retail investors. In addition, there were many contra trades, which are speculative trades, where investors buy and sell shares without paying for them. The data would show that these companies tended to be speculative counters and investors should be wary. 

Lim believes information transparency, which means the easy availability of data to individuals, plays a vital role in helping retail investors avoid pitfalls and traps in the market. 

In-depth data does not come free, but DiBots wants to make it affordable to retail investors. “This is our main goal: to empower retail investors,” Lim says, adding that the company would release more details in time. 

For now, institutional and professional traders have to spend RM750 to RM3,500 per account for access to DiBots’ data and analytical tools.