4th February 2021 - 3 min read
Bursa Malaysia has seen a significant increase in the participation of domestic retail investors in 2020, which brought the retail average daily trading value (ADTV) up by 236% to 1.6 billion. This is the highest retail ADTV to have been recorded in the stock exchange operator’s history.
“Despite the ongoing health and economic challenges, most capital markets with strong domestic liquidity such as Malaysia have benefited from the increased presence of domestic retail investors,” said the chairman of Bursa Malaysia, Tan Sri Abdul Wahid Omar, who added that the investors were encouraged by the convenience of online broking and a low-interest-rate environment.
For context, the surge in participation among Malaysian retail investors began relatively early in 2020, as indicated by a 125% year-on-year increase in new central depository system (CDS) account openings in the first seven months of the year itself. CDS accounts are mandatory accounts for those who wish to trade on Bursa Malaysia. This trend of active trading among retail investors continued all the way until the end of the year, peaking at an ADTV of RM7.2 billion in August. On top of that, data from MIDF Research also showed that the net purchases of stocks in Bursa Malaysia by retail investors in 2020 stood at almost RM14 billion.
Accordingly, this uptick in retail participation contributed to Bursa Malaysia’s improved full year financial results in 2020 – the highest to have been recorded since its listing in 2005. Its latest financial report showed that the total revenue had increased by 59% from RM502.49 million in 2019 to RM798.97 million in 2020. The stock exchange operator’s net profit also more than doubled from RM185.85 million to RM377.74 million during the same period. Additionally, the overall average daily trading value (ADV) of securities hiked from RM1.93 billion in 2019 to RM4.21 billion in 2020.
Meanwhile, the chief executive officer of Bursa Malaysia, Datuk Muhamad Umar Swift also highlighted the role of millennial investors, noting that 65% of the total CDS accounts that were opened last year belonged to millennials aged between 25 to 40 years old. “The increase of millennial investors is a positive development for the long-term sustainability of the market as they are key drivers of socially responsible investing,” he said, adding that improved financial literacy among retail investors demonstrated the increased effectiveness of its outreach programme in recent years.
Finally, Datuk Muhamad Umar said that Bursa Malaysia’s ability to handle the significant increase in volume and to achieve an exceptional financial performance is a testament to its commitment to improve and grow. By investing in its growth initiatives, Bursa Malaysia has gained itself a solid foundation, contributing to the resilience of the Malaysian capital market and making it one of the strongest in the ASEAN region.
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