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Wednesday, 3 May 2017

(The Star) More young investors entering into Malaysian market

PETALING JAYA: Younger investors are entering the market in larger numbers, with Bursa Malaysia revealing a 36% jump in the number of Central Depository System (CDS) account holders aged 25 years and below.

This age group was the fastest-growing band among CDS holders in 2016, with a total of 27,252 account holders as at Dec 30, 2016.

Coming in second, and also an encouraging sign to the stock market regulator, were investors between the ages of 26 and 35. That age band has a total of 192,123 CDS accounts.

The stock exchange said the increase in CDS accounts among the young was a direct result of its targeted efforts to attract young investors through various financial literacy programmes held at universities.

Bursa Malaysia CEO Datuk Seri Tajuddin Atan told StarBiz that the stock exchange conducted programmes targeting millennials at the university level to ensure they learnt the basics of investing at an early age.

“We also set up investment clubs in universities. We want to make sure that investing becomes second nature for them, and for this, we have to reach out to this group as early as possible.”

However, Gen-X, those between 46 and 55 years of age, remained the group with the largest number of CDS account holders in Malaysia. That is followed by those between the ages of 56 and 65 years of age, and the 36 to 45 years category.

There were 2.49 million CDS account holders in Malaysia last year, an increase of 0.4% year-on-year.

Getting retail investors into the market has always been a priority for Bursa Malaysia. Apart from adding to velocity of trades, having more people invest in the stock market also helps in generating wealth for Malaysians.

That is gaining traction as Malaysia’s overall retail participation rate in trading activity was now at about 23%, an increase from 20% last year.

Tajuddin noted that the numbers did not merely indicate new accounts, but those who were actively using their accounts.

“There are still so many Malaysians falling for investment scams and get-rich-quick schemes. We can only resolve this by improving financial literacy,” he said.

For the age group between 26 and 35, he said the stock exchange had consciously targeted this group as they had more disposable income to invest. He said campaigns to draw younger people into the market was done to ensure they developed the right mindset regarding investing.

“We also want them to know that they don’t need to have a lot of money in order to start investing,” he said.

On the investor profile being largely above the age of 56 years, he said it was natural, as this was the group of people who had been investing for many years.

However, he said, in terms of the level of activity, it was almost the same as seen in the age group of 36 to 55 years.

What will also help in attracting younger traders is the potential new system where trades are executed via a direct pass-through online system that bypasses human intervention.

While this is practised in other developed countries, it is currently not done in Malaysia.

“An online trading platform will lower the cost of transactions and, at the same time, there is better access to information. It also provides the consumer with more choices, so it would certainly be a positive development for the market,” he said.

On the implication to remisiers, he said they would continue to play a large role in the country’s capital market.

“The market has various types of investors. While the younger generation may be comfortable using a fully-online platform, there will still be the middle-aged and older group that will want to deal with remisiers.

“So, I think there will be a place for everyone,” he said.

As for the stock exchange, he said, a direct pass-through online system could significantly boost trading activity in the retail space.

Bursa Malaysia is holding its “Bursa Malaysia Excellence Awards 2016 Gala Nite” today to recognise the outstanding performance of brokers and market intermediaries in 2016.

Tajuddin said brokers and intermediaries had greatly contributed to the growth of the capital market.

“Our theme this year is Recognising Malaysia’s Best. We will be awarding our winners based not only on the total value they have generated, but also based on regulatory and compliance matters,” he said.

In terms of the judging criteria for equities, it would be 60% based on value, 30% on regulatory and compliance matters and 10% on the opening of new CDS accounts.

“We want to recognise them and ensure that their contribution in developing and improving the market does not go unnoticed,” he said.