CGS-CIMB: Retail Investors Are Shifting From Stock Markets To Safer Investments

Alex Cheong Pui Yin

24th June 2021 - 3 min read

A survey by CGS-CIMB Research has found that retail investors are now beginning to move away from stock markets to other safer investment products, thereby tempering the bullishness of the stock market that had grown since 2020. This was revealed in its Retail Investors’ Sentiment Survey (Second Edition), which polled a total of 1,044 participants between April and May 2021.

According to the survey, only 49% of its respondents chose direct investment in the domestic stock market as their first choice of investment. This is slightly lower compared to the figure recorded in last year’s survey, where 52% of its respondents preferred to invest directly in the local stock market.

The latest Retail Investors’ Sentiment Survey also showed that 13.5% of its participants preferred to invest via Amanah Saham Nasional (ASB) or the Employees Provident Fund (EPF). Meanwhile, investment via domestic unit trusts and direct investment in overseas stock markets both clocked in 8.4% each.

Aside from that, 8% of the survey participants also opted for investment via robo-advisers, whereas 5.8% said they preferred to invest in a unit trust that has overseas market exposure. The remaining 6.8%, on the other hand, noted that they had other preferred investment instruments (undisclosed).

“This helps explain the slight drop in retail participation in the daily trades of the Malaysian stock exchange. This could also be due to the reopening of the economy or retail investors are shifting to less volatile investment products for exposure to the stock market via the EPF and ASB where the downside risks are better protected,” explained CGS-CIMB.

In 2020, Malaysia’s domestic stock market saw a significant increase in the participation of domestic retail investors, particularly among millennial retail investors. This was driven primarily by the convenience of online broking and a low-interest-rate environment. The bullish sentiment continued to persist even during the first quarter of 2021 (Q121), with an average retail participation of 39.3% and a retail average daily trading volume (ADTV) of RM1.99 billion alongside net buys of RM5.36 billion. The daily trade shares began to lag slightly soon after, with May 2021 recording a participation rate of 38.2%.

CGS-CIMB also noted that robo-advisors are gradually growing more popular as a vehicle to gain immediate exposure to the stock market. This could be attributed to the ease of accessibility provided by these instruments.

Aside from shedding light on the changing investment preference among Malaysian investors, CGS-CIMB’s Retail Investors’ Sentiment Survey also polled its participants on various other aspects. These include their sources of funds for investment, expected rate of return for selected investments, as well as major concerns in investing.

You can find out more about the CGS-CIMB’s latest Retail Investors Sentiment Survey here.

(Sources: The Star, The Malaysian Reserve)

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Alex Cheong Pui Yin

Previously covered recruitment-related stories and had a short stint as a copywriter for the property industry. She subsequently developed an interest in investment and robo-advisors.

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