KUALA LUMPUR: Foreign selloff in Malaysia’s capital market has been cushioned by increased participation of local institutions and retails investors, said the Securities Commission (SC) chairman Datuk Syed Zaid Albar.
Although there has been some volatility in the domestic bond and equity markets, Malaysia continues to perform relatively better than its emerging peers in the region.
Syed Zaid said the capital market was mainly supported by deep liquidity of the fund management industry.
“While the local capital market is affected, it has remained orderly given ample liquidity and robust infrastructure. However, significant uncertainties still remain. The equity market is mirroring the global trends but to a lesser degree,” he said at a virtual press conference on the SC Annual Report 2019 yesterday.
The SC executive director of market and corporate supervision Kamarudin Hashim said it had seen a marked improvement in retail investors’ participation in Bursa Malaysia since January.
“Year-to-date, it represents 44 per cent in term of trading volume compared to 40.9 per cent last year, while the trading value of retail investors represents 24.3 per cent compared to 20.8 per cent last year.
“Thus, we see an increase of retail investors’ participation including via online channel. For example in March, we see online trading account activation exceeding 10,000. We certainly see changes in retail investors’ participation in the capital market,” he added.
Last year, the equity market particularly recorded total outflows of RM11.1 billion compared to an outflow of RM11.7 billion in 2018, according to the SC's Annual Report 2019.
In the fund management industry, total assets under management rose to RM823.2 billion RM743.6 billion in 2018.
This was driven by robust performance of small and mid-cap equities and higher net injection from dividend reinvestment, the report said.
Total net sales for the unit trust segment amounted to RM30.5 billion in 2019, down 19.5 per cent from 2018's RM37.9 billion.
Syed Zaid echoed the International Monetary Fund that the Covid-19 pandemic had caused the worst economic downturn since the Great Depression in the 1920s.
“This is an unprecedented situation globally and domestically. Bank Negara Malaysia expects the local economy to return to some normalisation in the second-half of 2020 with recovery in 2021,” he added.
He said the economic downturn and oil price war had wrought investors’ sentiment on listed companies’ performance, market volatility and potentially liquidity.
“Although we note a rise in redemption in March, our licensed fund managers are poised to manage redemption in an orderly manner.
There has been no major redemption risk. In fact, we have seen some new investments flowing to unit trust,” he said.
Syed Zaid said foreign selling in Bursa had hit its highest level in March amid volatility across the global market.
“Foreign investors, especially those strategic holdings, have remained consistent over the years. As at end of March 2020, foreign shareholding was around 22.46 per cent. The average foreign shareholding in 1998 to 2019 was about 22.3 per cent.
“During this 20-year period, the lowest level of foreign shareholdings in our equity market was about 18 per cent in 2002,” he said.
He said local brokerage firms and investment banks remained strong and continued to intermediate during the Movement Control Order period.
“The SC also works closely with Bank Negara on prudential requirements of IBs.”
Syed Zaid cautioned that the market had not seen the full impact of Covid-19, pointing out that some countries were experiencing the second wave of the pandemic.
“The measures put in placed by the government and regulators will cushion the impact of Covid-19. We cannot say the extent of the mitigation until we see the full impact of the pandemic panning out.
“But we are sure that companies and intermediaries are able to sustain through this period and seize recovery opportunities when the time arises,” he said.