KUALA LUMPUR (Feb 10): "Are you of able body and mind? Do you have cash to invest? If yes, then seek your fortune on the stock exchange as a retail trader. All-new incentives and products, such as fee waivers and intraday short selling, await you."
This is the tongue-in-cheek description that appeared on the front page of The Edge Malaysia for its cover story for the week of Feb 12-Feb 18, 'Bringing retailers back to Bursa Malaysia', by senior writer Supriya Surendran and Executive Editor Kathy Fong.
Humour aside, this is essentially what Bursa Malaysia wants -- to lure veteran retail investors who have gone missing for quite a while back to the local exchange, and to get the younger generation who don't quite know that equity investment does not have to be a risky game, to give the equity market a try.
That's the reason behind the slew of measures announced by Prime Minister Datuk Seri Najib Razak last week to whet investor appetites, including a volume-based incentive programme and a six-month waiver on trading and clearing fees for new investors who have never had a Central Depository System account.
He also announced that trading in the shares of mid and small-cap companies would be exempted from stamp duty for three years from March.
Retail investors have long shied away from the local stock market, the weekly noted. Many have turned instead to unit trusts or real estate, particularly during the recent property boom, it added.
For Gen Y, investing in the stock market appears not to be their cup of tea, what with alternative investments such as cryptocurrencies, which are seen to be more exciting and lucrative -- according to a side story on 'When the stock market can't compete' by assistant editor Ben Shane Lim. Others are investing their savings in business start-ups, hoping to become the next Mark Zuckerberg or Jack Ma, the weekly noted.
If investment money is going into these alternatives, that means there's less available to flow into the stock market. "Two decades ago, many investors ditched their CDS accounts after being burnt by the 1997 Asian financial crisis, preferring instead to go for unit trust funds. Then at least, the money ultimately found its way back to Bursa. Today, the competition is taking money away from the bourse," the weekly noted.
The lacklustre retail interest is affecting the local stock market ecosystem, indications of which include market velocity and vibrancy. Retail participation, by value, has hovered at around 20% -- if not lower -- for years. Just last month, retail participation was at just about 14.6%.
In contrast, the Stock Exchange of Thailand sees between 40% and 45% of its trading participation by value coming from retailers. New CDS accounts in Malaysia have also been on a decline. In 2016, only 112,572 new CDS accounts were opened, bringing the total to 2.5 million. In 2012, 207,393 new accounts were opened.
Which is why The Association of Stockbroking Companies Malaysia (ASCM) views the measures announced as a “tremendous leap forward towards improving market performance”. In a statement last Friday, ASCM said the new measures will ease stock trading rules, boost trading velocity in terms of volume and turnover, and expand the investor base.
Kenanga Investment Bank executive director and head of equity broking Lee Kok Khee told The Edge that the measures are holistic in nature and in the right direction to increase retail participation as well as provide greater depth to the market.
It appears shareholders of Bursa Malaysia Bhd is positive on the incentives too. Bursa's counter was up 7.2% year to date and up 30% year on year at last Friday’s close of RM10.82.
For a closer look at the seven new measures announced, including the planned Malaysia-Singapore connect, how they will be implemented, and what they actually mean to investors, pick up a copy of The Edge at newsstands near you today.
Save by subscribing to us for your print and/or digital copy.
P/S: The Edge is also available on Apple's AppStore and Androids' Google Play.