This article first appeared in Capital, The Edge Malaysia Weekly on January 10, 2022 - January 16, 2022

I was in Singapore recently and was among those on the maiden Vaccinated Travel Lane (VTL) flight from Kuala Lumpur. The air fares aside, I also had to fork out about RM1,105 in total for one RTK-Antigen test and three PCR (polymerase chain reaction) tests that I was required to take just to make that return trip. That set me thinking about how the way we travel has been dramatically altered due to the Covid-19 pandemic.

Being a stockbroker, it also made me reflect on how the pandemic had impacted the local equity market and what the future holds for those who invest in stocks, in particular, those who are only beginning or planning to do so — the millennials and the Gen Z. What did this new generation of investors think about the local bourse in 2021?

For me, it was eventful but largely forgettable. When the year began, I was fairly optimistic that 2021 would continue to be a good year, further extending the bull run that had started in 2020. The FBM KLCI had just breached 1,600 points in the last month of 2020 and Bursa Malaysia ended 2020 as the best-performing market in Southeast Asia. So, I could be forgiven for being sanguine about the market for 2021.

But alas, my hope for an even better 2021 was short-lived as investors turned cautious amid the political uncertainties and the FBM KLCI soon slipped below 1,600 points by the third week of the year.

Then the government declared a state of emergency and reimposed the Movement Control Order (in its various forms) and like many other investors, I began to worry about the negative effects on the economy.

To be sure, 2021 was not short of excitement. The unprecedented legal action by one listed company against the regulator (and the regulator countersuing the company) would certainly rank among one of the more interesting events in 2021.

And for the first time in more than two years, I was gratified to see foreign investors turning net buyers of Malaysian equities to the tune of RM3.3 billion during the August-October period. But this did little to save Malaysia from the ignominy of being the second worst-performing market in Asia in 2021.

So, how will the market fare in 2022? Well, after being wrong this time last year, I am more cautious now. Interest rates are expected to rise, both globally and locally, and this will generally be bad for stocks, although it would be much-welcomed news for those with money in the bank.

In 2020, many of us benefitted from the loan repayment moratorium. Coupled with low interest rates, many piled their “spare” cash into the stock markets. But that’s no longer the case now, nor will it be in 2022.

What worries me is that the local bourse seems to be heading into hibernation. Total traded value on Bursa Malaysia in 2021 was already lower by 16% compared to the preceding year and this could drop further — possibly by another 15% in 2022, with the Covid-19 pandemic now entering into its third year and with no end in sight.

As my plane touched down in Kuala Lumpur International Airport on my return and as I was made to take yet another PCR test, I realised that the “new normal” has compelled many of us to adopt new ways, not just in how we live our daily lives but also in how and what we invest in.

Despite the gloomy outlook I painted earlier (probably influenced by the cloudy skies that accompanied my journey back home), I still have faith in our local equity market. After following the stock markets for decades, I know that markets move in cycles — ups and downs. Bursa Malaysia may be going through a down cycle now but there will come a time when all the risks would be arguably in the price and it would be safe to get back into the water again.

The equity market has always been my favourite subject and equities my preferred asset class. Truth be told, there seldom is a dull moment. Practically anything and everything that happens around us has some bearing on the stock market. This is the reason why they say the stock market is not just a barometer but also a predictor of the economy.

My thoughts soon shifted back to the millennials and Gen Z. What do I say to them, especially in the light of the uncertainties brought about by the pandemic? I would tell them to start investing if they have not already done so. It is never too early nor too late, and no investment is too small to begin with.

If men are creatures of habit, then a good habit to pick up would be to start setting aside leftover cash or savings and putting them in mutual funds or unit trusts or even directly into stocks. In a falling market, value will eventually emerge. And in the new normal environment, stocks with good environmental, social and governance scores are recommended.

The pandemic and the volatility of the stock market in the last 20 months have, in some ways, caused a reset for many of us. But it is also a time for us to re-evaluate our priorities and for some, to rebuild what was lost.

Happy investing and cheers to a better year ahead!

Gan Kim Khoon is head of equity markets at AmInvestment Bank. The views expressed here are his own and may not necessarily reflect the house view.

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