Friday 29 Mar 2024
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This article first appeared in Capital, The Edge Malaysia Weekly on July 29, 2019 - August 4, 2019

OLDER investors often reminisce with great fondness about the bull run of the early 1990s, when money seemed to fall into their laps without effort. But the 1997/98 Asian financial crisis brought the wild party days to a crashing halt.

Many of the younger investors today do not put enough into equities, perhaps because most of them grew up in a more risk-averse environment, taught to be careful of the stock market.

Can they be attracted back to equities?

 

Maybank Kim Eng regional head of brokerage Jeffrey Goh: Young people are more likely to be following a financial blogger than calling their broker and, when they do make a decision to invest in equities, they will trade via the app in the smartphone in their pocket.

In this regard, we have changed our mindset to providing intelligent, seamless support to this borderless, loyalty-free group of investors. That support includes tools devised by experienced analysts, access to data and decision-making functions to help them support the stock tip they saw on Facebook.

Aside from a subdued stock price performance and lower return on equity from corporate Malaysia, there is also the prevailing perception among younger investors that the stock market is riskier, prompting many to opt for property or alternative investments such as cryptocurrency.

Young people will come into the stock market when the stock market earns their support. Companies need to perform for their shareholder base. New products that make investing more relevant to younger people need to be supported.

 

PM Securities Sdn Bhd CEO Andrew Yaw Mun Keng: In the 1990s, the market was bullish and there were not a lot of asset classes available for trading and retail investors. Today, we can trade in derivatives, we have unit trusts, foreign exchange and retail debt paper, in addition to cryptocurrency and P2P. We are competing with all of them. Are we losing investors? No, we still have plenty of investors but they have more choices.

Stockbroking is now struggling because the value proposition is no longer sexy. They are still offering a simple thing called equity trading. But we should always remember, whatever asset class you look at, you must never ever forgo equities. Equities will always and should always be there. Today, we are in a painful trading environment because there is no volatility and the sentiment is not that encouraging. We do not have enough depth in the market at this point in time.

But many investors are waiting on the sidelines, watching the ongoing corporate restructuring and waiting to pounce on the right opportunity. It is a question of when and how they will come back.

 

Rakuten Trade managing director Kaoru Arai: Generally speaking, one possible reason for low retail participation could be the general perception that trading in shares is risky and must require face-to-face interactions with a broker. People also view trading in shares as complicated.

We understand the need to address these concerns. Education is very important, not just on trading but how to trade via a completely online platform. In line with this, Rakuten Trade has a suite of social media-friendly videos, images to help guide clients to trade digitally and seamlessly.

We keep things simple and cost-effective, in tandem with the constantly evolving digital landscape where speed and convenience are expected.

We also believe innovation is vital in this day and age and we must have products that cater for the rapidly changing needs of the market.

Rakuten Trade has attracted a growing segment of new investors who are more digitally savvy and have a more e-commerce lifestyle, as they prefer the benefits of a completely digital platform like ours.

 

Hong Leong Investment Bank Bhd dealer representative Frank Lin: The problem of young people not investing in equities has not much to do with the brokers. In my opinion, [it is because of the many cases of] corporate manipulation and failures due to the late detection and lax enforcement by the authorities. These deficiencies have created a perception among young investors that the stock market is a big casino and not suitable for long-term investment.

The main challenge for the local stockbroking industry is the development of the stock market. Sustainable development based on prudent management and effective monitoring will help to improve operations and the image of the local market and, thus, attract investors to remain invested.

 

Association of Stockbroking Companies Malaysia (ASCM): The younger generation of retail investors have better investment knowledge, [want] a greater emphasis on customer service and the trading experience. Demand for better services and lower cost are critical considerations in the stockbroking industry. This has led to the growth of online platforms in recent years.

Going forward, all quarters must address the issue of increasing the awareness of millennials in the capital market and, at the same time, finding innovative ways to induce them to trade in equities.

Certain statistics have shown that more than half of Malaysians are not aware of the existence of Bursa Malaysia. Therefore, there is still a huge untapped market. The penetration level is less than that of other countries such as Japan, Taiwan, South Korea and Singapore.

In view of this, financial literacy and education are important to help investors realise the importance of investing their wealth [in] equities ... Industry players must be able to introduce low-cost, high-volume products that would create wealth for the investors.

Apart from focusing on digital transformation, successful brokers need to find a way to bring in human interaction services to remain relevant.

 

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