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Retail Investors Help Malaysian Stocks Recoup Losses

Economic News: Malaysian stocks have been among the top performers in Southeast Asia, partly due to the government’s coronavirus support to local retail investors.

One investor termed this as “money to play with.”

Malaysian retail investor participation hit a record high, while foreign funds withdrew from several stock markets around Asia.

According to Bursa Malaysia, the exchange operator, retail investors recorded a net buy of $1.53 billion worth of securities between January and June 2020. In contrast, the net outflow by foreign investors was $3.79 billion in the same period.

The exchange also noted that daily retail investors reached $218.7 million from January to June 2020. This doubled the $95.9 million recorded for the entirety of 2019.

Gerald Ambrose said that a “coincidence of factors” made the stock markets “look attractive to retail investors.” Ambrose is the chief executive of Aberdeen Standard Islamic Investment in Malaysia.

He further explained that various government measures to support the economy during the pandemic gave Malaysians greater access to money.

The measures include allowing delayed payment on some loans and loosening the criteria for withdrawing from the federal pension fund.

 

More retail investors is a good thing.

Increased retail investor participation has helped the benchmark Malaysian stock index recoup almost all the losses from a sell-off in March.

The index has lost 2.1% this year, one of the smallest losses among Southeast Asia’s major indexes.

Glove producers are among the top-performing stocks. They reported a surge in demand due to the pandemic.

Top Glove’s shares surged by more than 440% in 2020. Top Glove is the largest medical glovemaker globally.

Some analysts and investors have raised concerns over greater retail investors involved. They say it could lead to excessive market speculation. However, Ambrose said retail investor presence was a good thing. He said it was good to see retail investors back and make money and there was no harm that.

However, he added the stock exchange might want to watch for ‘syndicates’ that pump up stocks excessively before dumping them, which tends to hurt retail investors the most.

He thinks that’s what the stock exchange might want to close off, not kill everything.

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