Technology, millennials to drive retail participation on Bursa

Retail investors made up the largest portion of participation on the local bourse last year with a net buying amount of RM14.3b


THE high retail participation in stock trading observed in Bursa Malaysia last year has the inertia to sustain into this year as young amateur investors enjoy easy access via online trading and the popularity of self-directed investment.

Retail investors made up the largest portion of participation on the local bourse last year with a net buying amount of RM14.3 billion against local institutional investors at RM10.3 billion.

Bursa Malaysia Bhd securities markets division director Azhar Mohd Zabidi said the pandemic year saw 80% of the retail tradings being performed online.

“If we look at our market today, the share size of the asset under management (AUM) as of February 2021 stood at RM992 billion, just RM8 billion shy of RM1 trillion.

This is basically where people have been putting their money into.

“Retail investors are back. Retail participation is already at 24%, a quarter of the market, which is the highest it has been in the past five years. Trading value reached its highest in decades in 2020.

“We believe there are many contributing factors, including self-directed investment which is gaining popularity,” he said during the “Retail Investor Behaviour: 2020 and Beyond” webinar organised by the Institute for Capital Market Research yesterday.

Azhar said the high traction in self-directed investment indicates the easy access to information and education of online trading platforms.

“This definitely contributes to the high participation among young investors. They are also taking the opportunity to invest as the loan repayment moratorium created a pool of investable income,” he said.

Azhar said retail investors participation used to account for 67% of the equity market trades about 20 years ago in contrast to the current level.

StashAway Malaysia Sdn Bhd country manager Wong Wai Ken said access to financial education is key to understanding the different asset classes overseas and further spurs the participation of retail investors.

“Financial technology has been a great leveller of the playing field. Access has been a huge theme since the Securities Commission Malaysia (SC) started its digitisation agenda to help small and medium enterprises raise capital and democratise investing.

“Since the SC issued its annual report last year, there have been new ways of accessing the exchange-traded fund and overseas portfolios, with almost RM600 million AUM now being managed by robo-advisors alone,” he said.

Azhar expects retail participation in the local equity market in the long term to be driven by technology which will attract more millennial investors.

“Continuous innovation serves as a key in bringing a positive outcome. In recent years, we saw a significant increase in the number of investors coming into our local market.

“The key positive note for the bourse is that over 50% of the new investors are millennials and it demonstrates a sustainable interest in our market,” he said.

The Covid-19 pandemic, which has caused Movement Control Orders, new work from home culture and loan repayment moratorium, has encouraged retail trading with volume on securities exchanging hands on Bursa Malaysia rising sharply to over the 10-billion mark daily, driven by interest in glovemaking and healthcare stocks last year.

The end of the loan moratorium has chipped away some of the liquidity from the market, while the expectations of a recovery in the economy due to the rollout of the vaccines have seen money shift into the cyclical counters at the expense of volume traded, which have fallen below the average seven billion securities daily, in the past month.