Malaysia doubles online settlement limit for stock trading as small investors rush in

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KUALA LUMPUR (June 3): Malaysia will double the online settlement limit for the trading of equities this year, as the rush of small investors into the stock market pushes it into bull territory, according to Bloomberg.

The Securities Commission will facilitate up to RM100,000 daily online settlement in the second half of the year, from the current limit of RM30,000 to RM50,000, the news agency wrote today, quoting executive chairman Syed Zaid Albar.

Individual investors, it wrote, are finding more time to flock into stocks from their homes amid a nationwide lockdown, spurred on by relatively cheap stocks amid low interest rates.

The interest of such investors have resulted in a 54% jump in new accounts from January to April, compared with the same period last year, the news agency wrote, quoting Bursa Malaysia Bhd chief executive officer Muhamad Umar Swift. They were also more active, causing the daily trading value to surge 65% in April from a year ago, he said.

While foreign funds pulled US$3.2 billion from Malaysian stocks this year, local individual investors have poured in RM4.03 billion, Muhamad said.

The benchmark FTSE Bursa Malaysia KLCI Index, according to Bloomberg, had risen more than 20% from a low in March, led mainly by glove makers, with trading volume hitting a record 11 billion shares.  

The locals’ renewed interest in online trading has also helped a local unit of Rakuten Securities Inc turn profitable in April since opening in 2017, said Kaoru Arai, managing director of Rakuten Trade. The online brokerage, a joint venture between Rakuten and Kenanga Investment Bank Bhd, now has more than RM1 billion of client assets under trust, he said.

Syed Zaid said the industry should take this chance to speed up digital offerings and widen market access.

Bursa, meanwhile, plans to roll out more financial literacy programmes to ensure individual investors can support a sustainable market, Muhamad said.