LOCAL RETAIL INVESTORS ARE NOT AGREESIVE IN BURSA MALAYSIA

Yusli: Bursa lacks support of local investors
By KATHY FONG (Tuesday January 23, 2007)
http://biz.thestar.com.my/news/story.asp?file=/2007/1/23/business/16649924&sec=business

KUALA LUMPUR: Foreigners are more bullish on and have stronger interest in Malaysian stocks than local investors, according to Bursa Malaysia chief executive officer Datuk Yusli Mohamed Yusoff.

“Foreign fund managers are gung-ho on Malaysian stocks. However, local investors seem to have no faith in domestic companies,” Yusli commented after the launch of FTSE Emas Syariah Index yesterday.

He noted that foreign institutional investors were the net buyers on Bursa, accounting for 35% of last year's daily volume. Locals, especially retail investors, were still waiting on the sidelines although the market had rallied for more than three months.

“Retail investors have not returned to the market in a big way yet. “It would be a shame if our investors miss the rally on Bursa,” said Yusli, who blamed the slow retail interest on the lack of promotional efforts by stockbrokers. “There are many undervalued stocks. And yet retail investors do not know what stock to buy,” he said.

The bullish sentiment on Bursa gathered strength in the second half of last year, led by plantation stocks and companies that were undertaking merger and acquisition activities.
The strong rally had indeed overshot the expectations of many investment analysts.

The benchmark KL Composite Index ended last year above 1,000 points and continued to charge ahead, soaring near the 10-year high of 1,271 points to close at 1,157.85 yesterday.
Yusli said the market velocity had risen to 45% since the start of the year, compared with about 33% last year.

He, however, said the current level was still low relative to that in other regional markets. “The challenge for us now is to sustain the volume.” Market velocity is the measure of the total value of trades in a period in relation to the total market capitalisation. On market talk that Bursa would declare another capital repayment, Yusli said there was “no immediate plan for that” although it was Bursa's policy to return any excess capital to shareholders.

Bursa declared a capital repayment of 83 sen per share together with an interim dividend of 10 sen per share in August 2005. Bursa's share price shot up 60 sen to RM10.70 yesterday, with 5.49 million shares traded. On the newly launched FTSE Emas Syariah Index, Yusli said it would set a platform to introduce Islamic financial products.

He expected Islamic structured products, including futures, on the index to be rolled out as early as the second half this year. The existing KL Syariah Index will run parallel with the FTSE Syariah Index for nine months from yesterday.