DOMESTIC economy/politics, external factors (global stock market performances, global economy), and sharp falls in stocks/markets are three biggest concerns surrounding retail investors over the next three months.
Such is the findings of the second 2021 CGS-CIMB retail investors’ sentiment survey which entailed a participation of 1,044 Malaysian retail investors responded to our survey request which was conducted between April 20 and May 41 (a 41-day period).
The survey’s aim was to better understand Malaysian retail investors’ preferences, views and investment strategy.
For the record, retail investors are the largest participants in Bursa Malaysia today, both in terms of volume (37% share of traded volume in 5M 2021) and in terms of value (net buyers of the Malaysia equities market with +RM6.4 bil in 5M 2021.
“89% of the sample surveyed indicated that their current disposable incomes remained below pre-COVID-19 levels with over half of the respondents reporting incomes at 60% or below pre-pandemic levels,” revealed CGS-CIMB Research.
“Benign inflation expectations may explain why 72% of those polled expected the overnight policy rate (OPR) to remain at or below the current level of 1.75% over the next 18 months. Just 24% of those polled expected monetary policy normalisation to occur by end-2022.”
“A significant rise in OPR or availability of alternative investment products that offer higher returns may entice profit-taking in the equity markets among retail investors as most are deploying their savings to achieve higher returns.”
Moving forward, key areas to track closely are domestic sentiment on the economy and political situations – if sentiment worsens, retail investors could reduce their exposure to the domestic stock market.
“The survey suggests that consumer sentiment remains relatively weak although this observation is caveated by our sample data which is skewed towards those earning incomes higher than the population average,” noted CGS-CIMB Research.
“We think if the Government can achieve its re-opening timeline targets as listed in the National Recovery Plan, investors could shift to recovery stocks by July/August. Our top three key picks in this theme are Malayan Banking Bhd (Maybank), Genting Bhd and Malaysia Airports Holdings Bhd,” it said.
The three biggest sources of funds deployed to invest in the stock market are (i) savings, (ii) income from employment and other sources, and (iii) additional funds from lower Employees Provident Fund (EPF) contributions and withdrawals (notably i-Sinar and i-Lestari). – June 21, 2021
