KUALA LUMPUR, March 25 (Bernama) — Foreign investors from the Asia-Pacific and the Caribbean have outnumbered those from North America and the Middle East in the Malaysian equity market over the last six years, said the Securities Commission Malaysia (SC).
In its Annual Report 2023/Capital Market Stability Review 2023 released Monday, the SC said investors from the Asia-Pacific went up by 4.34 percentage points to 42.36 per cent in 2023 from 38.02 per cent in 2018 while the Caribbean regions added 1.40 percentage points to 3.03 per cent in 2023 from 1.6 per cent in 2018.
Foreign investors from North America decreased by 4.23 percentage points to 22.36 per cent in 2023 from 26.59 per cent in 2018, and those from the Middle East were down by 1.31 percentage points to 1.36 per cent in 2023 from 2.67 per cent in 2018.
“Investors from the Caribbean region increased to 4.20 per cent in 2021 from 2.01 per cent in 2020, mainly due to holdings in the healthcare, industrials and energy sectors which had an improvement in holdings value by RM161.28 million (RM4.72=US$1), RM4.59 billion and RM16.80 million respectively,” it said.
On interest in equity counters, the SC said healthcare counters received greater attention in 2020 due to the global COVID-19 pandemic, whereby investors in those counters increased by 5.70 percentage points to 11.43 per cent in 2020 from 5.86 per cent in 2018.
Investors in the financial sector experienced a sudden decline in 2020, going down by 2.78 percentage points to 19.02 per cent in 2020 from 21.80 per cent in 2019 due to the economic slowdown as global activities came to a temporary pause during the COVID-19 pandemic.
“Investors in the information technology counters increased by 2.57 percentage points over a period of five years, from 1.68 per cent (2018) to 4.24 per cent (2023), mostly attributed to strong growth in semiconductor and automation solution companies,” it said.
The SC said investors in the age group of less than 45 have increased between 2020 and 2021 from approximately 40.14 per cent to 40.74 per cent, caused by higher unemployment rates while younger individuals’ interest may have turned to investing as a way to generate additional income.
“Broader structural shifts in digitalisation during the COVID-19 pandemic have made it easier for investors in the age group of less than 45 years old to access capital markets,” it added.
The SC said in 2020, there was a discernible surge in the level of engagement from retail investors, predominantly stemming from their personal cash reserves. However, this trend has normalised since after the peak of the COVID-19 pandemic, decreasing back to 36.07 per cent in 2023, a trend that is also observed globally.
In the Malaysian equity market, foreign investors have consistently made up approximately one-fifth of the market since 2018 and the percentage has dipped below 20 per cent for the first time in April 2023.
The SC said that nonetheless, the five-year average of foreign investors composition ending 2023 was still at 21.41 per cent, above the 20 per cent threshold.
According to the SC, from 2018 to 2020, selling activities by foreign institutional investors were recorded at RM11.54 billion in 2018, RM11 billion in 2019, and RM24.38 billion in 2020, however, the market was supported by domestic institutional and retail investors.
It said that domestic institutional investors recorded RM7.71 billion in 2018, RM8.54 billion in 2019, and RM10.26 billion in 2020, while, domestic retail investors recorded RM3.99 billion in 2018, RM2.61 billion in 2019 and RM14.34 billion in 2020.
The SC said that in terms of trading, from 2018 to 2023, foreign institutional investors made up the bulk of foreign trading while foreign retail investors’ trading was relatively muted.
It said the composition of local strategic investors increased by 0.76 percentage points to 84.75 per cent in 2023 from 83.99 per cent in 2018, mainly caused by their improved holdings in the information technology sector, which grew by RM26.76 billion in value over a span of five years.
“Meanwhile, the local active non-strategic investors decreased by 0.75 percentage points and local passive non-strategic investors decreased by 0.01 percentage points from 2018 to 2023,” it added.
It noted that the composition of foreign strategic investors increased by 7.53 percentage points to 52.02 per cent in 2023 from 44.49 per cent in 2018.
“Similarly, foreign passive non-strategic investors also experienced an increase to 19.36 per cent from 17.65 per cent. This was due to the decline in holdings of foreign active non-strategic investors by RM36.58 billion in value,” it continued.
According to the SC, foreign active non-strategic investors had decreased by 9.24 percentage points from 2018 to 2023, due to a decline in holdings in the financial sector by RM13.58 billion.
“In summary, the composition of local investors is comparatively more stable than the composition of foreign investors. For instance, from 2018 to 2023, local investors declined by 2.42 percentage points by value, whereas foreign investors decreased by 16.50 percentage points,” it said.
— BERNAMA
