KUALA LUMPUR: The recent selldown in the stock market by foreign investors that caused jitters in the market should not be a cause for concern as the exit of foreign investors from time to time is merely “part and parcel of the marketplace”, according to Kenanga Investment Bank Bhd (Kenanga IB).

“This is a normal market cycle, whereby investors invest and divest in accordance with the requirements of their portfolio. Foreign funds take into consideration their global portfolios, and not the domestic market in isolation,” Kenanga IB executive director and head of equity broking Lee Kok Khee told reporters after the launch of KenTrade Trading Challenge yesterday.

“Fundamentally, I think we’re very strong. In terms of valuations, it is still a relatively attractive market to be in,” said Lee, adding that the current profile of the domestic market is a good mix of domestic and foreign institutions, and retail investors.

Lee, however, noted that there is need for greater retail participation, which is currently ranging between 20% and 25% from its high of about 30%.

“If you look at available statistics, the number of CDS account holders in the market is 4.3 million, which is only a small fraction of the investable public,” said Lee, adding that the figure also consists of duplicate accounts as some individuals have more than one trading account.

He said there is no optimal ratio as to the level of retail investor participation to the total market, but that he would be “very happy” if retail investor participation surpasses 30% within the next 18 months.

“This target market (retail investors) is relatively untapped,” he said, adding that promoting share trading and the equity market to Malaysian retail investors is a key objective of KenTrade Trading Challenge.

“Based on real-time market data from Bursa Malaysia, this challenge aims to simulate, as closely as possible, real-life trading. We hope that through this, non-traders, especially generations X and Y, will appreciate what online equity trading is like and hopefully debunk the misperception that trading is complex,” he said in a speech at the launch.

Each trading challenge participant will be given RM1 million virtual money to trade from Oct 13 to Nov 7. The grand prize winner will take home a Volkswagen Jetta worth RM130,888. The challenge has registered close to 10,000 participants so far.

This article first appeared in The Edge Financial Daily, on October 10, 2014.