Malaysia Raises Online Settlement Cap as Small Funds Rush In

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Malaysia will double online settlement limits this year as the rush of small investors into stocks helped push the market into bull territory.

The Securities Commission will allow up to 100,000 ringgit ($23,500) daily online settlement in the second half, from the current limit of 30,000 to 50,000 ringgit, Executive Chairman Syed Zaid Albar said in an emailed response to questions.

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

Such investors opened 54% more accounts from January to April compared with the same period in 2019, according to Muhamad Umar Swift, chief executive officer of Bursa Malaysia Bhd. They were also more active, with the daily trading value surging 65% in April from a year ago, he added.

While foreign funds pulled $3.2 billion from Malaysian stocks this year, local individual investors have poured in 4.03 billion ringgit, Muhamad said. The KLCI index surged 2.1% on Wednesday to the highest close since February as banking stocks surged.

Malaysians’ 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 1 billion ringgit of client assets under trust, he added.

The industry should take this chance to speed up digital offerings and widen market access, Securities Commission’s Syed said. Meanwhile, Bursa Malaysia plans to roll out more financial literacy programs to ensure individual investors can support a sustainable market, Muhamad said.

©2020 Bloomberg L.P.

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