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18 February 2023. Saturday
KUALA LUMPUR (Feb 18): Retail investors stayed on the sidelines for most of last year, with the cautious sentiment continuing from 2021, as investors’ irrational exuberance tapered off after the initial supercharged liquidity of Covid-19 loan moratoriums.
Nonetheless, things have turned more positive in the past few months — at least among the lower liners. The FBM ACE Market Index has delivered a return of 13.2%, and the FBM Small Cap Index a 11.3%, in the past three months, far outperforming the measly 0.4% gain in the benchmark FBM KLCI. As retail investors focus mainly on lower liners, it appears to suggest that retail investor sentiment has improved considerably.
Areca Capital Sdn Bhd chief executive officer Danny Wong attributes the return of retail investors in part to the robust initial public offering market.
“Last year was a bad year, so most investors were on the sidelines due to external factors, such as China’s lockdowns, US rate hikes, meltdown in the valuations of tech stocks, as well as the unstable political situation before the general election.
“Right now, things have improved, as you can see some stability in the new government. On the external front, the change of the tone by the US Federal Reserve with less hawkishness, coupled with China’s reopening, is a contributing factor to the improved sentiment,” he tells The Edge.
Given that most analysts believe interest rates have peaked — or will soon peak — will more investors be flooding back into the stock market?
Meanwhile, as the revised budget 2023 is set to be tabled in Parliament on the coming Friday (Feb 24), we take a look at how the local market performed in conjunction with the previous budgets, as well as what reforms can investors expect from the new government, and how these will impact financial markets.
In another accompanying story, we look at the best-performing ACE Market stocks, small-cap stocks (with a market capitalisation of below RM500 million each), as well as big-cap stocks over the past three months.
Read about it in our cover story in the Feb 20 issue of The Edge Malaysia weekly.
