Fintech to drive retail investing

“Without technology, we would not have come this far in terms of enduring the challenges of the past one year. Technology has been instrumental in financial markets, making them more efficient and transparent, ” said Bursa Malaysia director of securities market Azhar Mohd Zabidi.

KUALA LUMPUR: The capital market will continue to be an attractive destination for retail investors, facilitated by new technologies which enable better access to information and trading platforms, according to Bursa Malaysia director of securities market Azhar Mohd Zabidi.

“Without technology, we would not have come this far in terms of enduring the challenges of the past one year. Technology has been instrumental in financial markets, making them more efficient and transparent, ” said Azhar at the online “Retail Investor Behaviour: 2020 and Beyond” webinar discussion, organised by the Institute of Capital Market Research Malaysia (ICMR).

“We observed that more than 50% of the new investors are Millennials or the younger generation, which demonstrates that we have a sustainable interest towards participation in our market, which hopefully will continue for the future, ” added Azhar.

Other speakers consisted of University of Southern California senior economist Dr Joanne Yoong, Maybank Kim Eng regional head (retail brokerage) Lok Eng Hong, StashAway country manager Wong Wai Ken, founder Suraya Zainudin.

Also joining them was ICMR director Datin Azleen Osman Rani. Azleen pointed out that 2020 had been a defining year, which brought about many changes “including how we save, spend and invest”.

She said much discussed themes were the big disconnect between equity markets’ performance and the real economy, and recent events such as the GameStop stock frenzy, which had really drawn attention to the growing role of retail investors.

Azleen also noted the speculation and soaring equity markets had resulted in many news articles drawing parallels to the dotcom bubble of 2000.

“However, despite these similarities, there are also a confluence of other structural shifts, which did not exist back then, and that we’re seeing today, such as very easy access to online trading apps, zero to low cost commissions, and the immense power of social networks, which seemed to all point to a change in paradigm in the future, ” she said.

Azleen added that the convergence of finance and technology has facilitated the democratisation of markets – which have by and large, been much welcomed.

“However, it’s also now clear, especially in crisis periods, that it can cause real economic impact or pose financial stability risks, and inevitably there will be some people left holding the bag, ” she said.

Meanwhile, Wong said financial technology (fintech) has been a great leveller of the playing field. “I think access has been a huge theme ever since the Securities Commission (SC) started its digitisation agenda, to help small-medium enterprises (SMEs) raise capital and help democratise investing as well, ” said Wong.

“As a fund manager with a long-term view, we’ve packaged together portfolios of United States-listed exchange-traded funds (ETFs) for people to invest in. This new way of accessing overseas ETFs and portfolios, has not gone unnoticed, ” he said.

In January 2021, digital wealth manager StashAway announced it is managing over US$1bil (RM4.13bil) of assets, a feat that it achieved in less than four years after the company began offering its services in the region.

Founded in Singapore in 2016, StashAway has set up offices in Malaysia, Thailand, Hong Kong and the United Arab Emirates (UAE).

StashAway was the first digital investment manager – or robo-advisor – to receive a licence from the SC in 2018.

Regarding the sudden surge of retail investors in Malaysia in 2020, Lok said they were able to see value when the stock market plunged in March last year.

“Retailers were able to go in quickly, when the fund managers were busy selling and trying to raise money to protect against any redemptions. Retailers don’t have that concern, and they wait for the opportunity to buy when the Bursa is around 1,200 points, ” noted Lok.

Lok also pointed out another contributing factor was the drop in interest rates.

“As the fixed deposit rates start to come down, this hurt a lot of people. So they start thinking about buying stocks with good dividend yields, to get better returns, ” he said.

Lok also said the terms retail investors was grossly overused.

“Retail investors can range from the man on the street, with a small investment amount to some family businesses that could have billions to speculate with, ” he said.

Meanwhile, Suraya said as a content creator, she also found that nowadays, there is “way more discussions about investing” on online and social media.

“More people more talking about it and getting excited over the profits, that people share themselves on social media, ” she said.

Yoong pointed out that experienced retail investors who are taking advantage of the market volatility, with facilities like share margin financing, are very different from first-time newbie investors.

“When we look at a surge in retail investment, we want to look at these three factors - access, coverage of products, and the quality of products and think about what’s really driving those things from the supply side, ” said Yoong.


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