KUCHING: ‘Retail liquidity’ has shown no signs of abating after the movement control order (MCO), opined the research arm of Hong Leong Investment Bank Bhd (HLIB Research), as figures from Bursa Malaysia showed.
In a special report, HLIB Research noted that Bursa’s new CDS account openings totalled 218,000 year to date as of July, with July openings alone stood at 53,000. “Given the unprecedented surge, Bursa guided there is roughly a 2-3 month backlog in pending new accounts, guesstimated at circa 100,000,” it said in a note yesterday.
“In terms of overall retail investor’s age breakdown, 36 per cent are millennials, 61 per cent are more than 40 years and three per cent others. Those age more than 55 years account for 36 per cent of the value traded amongst retail investors.”
Gender wise, males make up 71 per cent of retail investors. By ethnicity, Chinese comprise 70 per cent of retail investors while Bumiputra is close to 30 per cent; the latter has shown a good increase from the low-20 per cent just two years ago.
Geographically, the most active retailers come from Selangor, KL, Johor Bahru, Penang and Ipoh.
“Meanwhile, retail participation from East Malaysia (Sabah and Sarawak) is still minimal and presents a potential “growth region” for Bursa,” Kenanga Research added.
Amongst retail investors, 74 per cent do online trading. Retailers are also doing more intraday trades at 34 per cent of retail traded value year to date versus 2019’s 28 per cent.
Based on Bursa’s classification, sectors that have the highest share of retailers by average daily volumes (ADV) as of end-July are industrial products and services (21.6 per cent, healthcare (19.5 per cent), tech (16.2 per cent), consumer (12.5 per cent) and energy (7.3 per cent).
“Year to date as of Aug 14, retail investors have net bought RM9.98 billion, which is more than four times the sum for the full year 2019 (RM2.41 billion). Their participation rate also came in at 33.5 per cent versus 2019’s 24.7 per cent and 10-year mean of 24 per cent.”
While there is no clear cut answer on why retailers came in strongly to the market, HLIB Research believed this to be due to Malaysia’s low interest rate environment causing retailers to seek higher returns in bashed down equities; in addition to more time to participate in the market while being locked down during MCO and the absence of gambling avenues during MCO perhaps led to gamblers taking their thrill seeking nature to the market.
“While we concur with these views, interestingly this “retail liquidity” has shown no signs of abating post MCO,” HLIB Research observed.
“Case in point is that retailers net bought RM3.3 billion with participation rate of 38.1 per cent in June-July, even higher than during the MCO months (March and April) of RM2.70 billion and 32.5 per cent.
“Retail numbers for this month (up to August 14) continues to look strong with net buys of RM1.45 billion and participation rate of 45.9 per cent. Nonetheless, there may be a downward normalisation in 4Q20 once the blanket loan moratorium ends on Sept 30 and changes to a targeted one.”
