Retail Investor Participation Post-MCO: A Boom or Bust?

Retail Investor Participation Post-MCO: A Boom or Bust?

Markets, Retail Investors Tango to New Highs

Examining the Surge and Sustainability of Retail Trading in Malaysia’s Capital Market

Introduction

The COVID-19 pandemic dramatically reshaped financial markets worldwide, and Malaysia was no exception. The implementation of the Movement Control Order (MCO) in 2020 brought about a paradox: economic slowdown on one hand, and a retail investing boom on the other. With people confined to their homes, stimulus aid flowing, and markets tanking (then rallying), retail investors flocked to the Bursa Malaysia, leading to record account openings and unprecedented trading volumes.

But now, years after the MCO era, a pressing question remains: Was it a fleeting boom or a sustained transformation?

This article unpacks the rise in retail investor participation post-MCO, analyzes current market trends, and evaluates whether this surge is proving sustainable—or if retail participation is gradually tapering off.

1. The Retail Boom During the MCO

When Malaysia enforced strict lockdowns starting in March 2020, economic uncertainty loomed. Yet, this period saw a sharp increase in retail investor activity:

  • Record CDS (Central Depository System) account openings

  • High trading activity among Gen Z and millennials

  • Use of mobile trading apps like Rakuten Trade, M+ Online, and MIDF Invest

  • Social media-fueled interest in “hot stocks,” penny stocks, and glove counters

📈 Bursa Malaysia reported in its 2020 Annual Report that retail participation in the equity market rose to 37.4%, compared to 21.4% in 2019.

Retail investors became major players in the market, even outpacing institutional funds in certain sectors, particularly healthcare and tech.

2. Factors That Fueled Retail Investor Growth

Several unique circumstances during the MCO catalyzed retail investing:

a. Time and Accessibility

Work-from-home flexibility allowed people to explore trading platforms, consume financial content, and engage in stock trading.

b. Stimulus and Moratorium Measures

Cash injections via Bantuan Prihatin Rakyat and loan moratoriums left more disposable income for some Malaysians, which was diverted into the stock market.

c. Market Volatility

Sharp declines followed by quick rebounds presented once-in-a-generation buying opportunities.

d. Rise of Finfluencers

Social media personalities and forums like i3investor, Lowyat Finance, and YouTube investment channels democratized stock research and analysis.

3. Post-MCO Landscape: Sustained or Subdued?

As Malaysia transitioned to endemic phases in 2022–2023, signs of cooling retail participation emerged:

  • Decrease in daily trading volumes

  • Return of institutional dominance in key sectors

  • Dissatisfaction with underperforming retail-favorite stocks (e.g., glove counters)

  • Rising inflation and cost-of-living pressures diverting capital away from stock markets

📊 According to Bursa Malaysia Market Review 2023, the retail share of trading value declined to around 25% in 2023.

While some first-time investors from the MCO era remain active, many have become dormant due to losses, market fatigue, or shifting priorities.

4. Evolution of the Malaysian Retail Investor

The post-MCO era has seen the retail investor profile mature. While some speculative behavior persists, a portion of retail investors are:

  • Embracing fundamental and technical analysis

  • Investing in ETFs, REITs, and dividend stocks

  • Diversifying into US markets via brokers like Tiger Brokers or Webull

  • Attending webinars and seeking financial certification (e.g., CFP, CMT)

The Securities Commission Malaysia (SC) and Bursa Academy have actively promoted investor education, reducing the information gap.

📘 Check out Bursa Academy for free investing tutorials, webinars, and tools.

5. New Investment Avenues Post-MCO

To retain retail interest and participation, Malaysia’s financial landscape is expanding:

  • Fractional investing through apps like Raiz and FSMOne

  • Digital asset exchanges like Luno enabling crypto investments

  • Robo-advisors such as StashAway, Wahed Invest, and BEST Invest

  • Digital banking licenses issued to players like AEON Credit and Grab-led consortiums promising seamless investment-banking integration

6. Challenges and Risks for Retail Investors

While access to capital markets has improved, retail investors face several risks:

a. Lack of Financial Literacy

Without proper knowledge, many fall prey to pump-and-dump schemes or misinformation.

b. Market Manipulation

Low-volume stocks are still vulnerable to manipulation, drawing in unsuspecting retail players.

c. Macroeconomic Uncertainty

Interest rate hikes, weak global sentiment, and domestic political risks continue to impact sentiment.

d. Regulatory Gaps

While the SC enforces fair practices, the oversight of “finfluencers” and social trading groups remains a grey area.

7. Is It a Boom or a Bust?

The MCO-era surge in retail investing was undoubtedly a boom. However, the cooling participation post-pandemic doesn’t imply a bust—it reflects a shift in behavior and expectations.

Retail investors are not disappearing; they are becoming more selective, informed, and long-term focused.

🔍 As noted by CGS-CIMB, retail investors still account for a significant share of daily transactions in penny and mid-cap stocks, and remain crucial to market liquidity.

Conclusion: The Path Ahead

Retail investor participation in Malaysia has transformed from a pandemic-driven trend into a formidable market segment. While not as explosive as during the MCO period, this group remains influential and evolving.

For policymakers, brokers, and platforms, the goal should be to enhance investor protection, build financial literacy, and offer innovative tools that support long-term engagement.

For retail investors, the journey ahead calls for discipline, diversification, and continuous learning. The MCO may be over, but the opportunity to grow wealth through the capital market is still very much alive.

Further Reading & Resources

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