KUALA LUMPUR (BLOOMBERG) - Amateur traders and a spectacular rally in rubber glove stocks are driving record volumes on Malaysia's stock exchange, helping the bourse operator outperform the rest of its major global peers this year.
Bursa Malaysia Bhd has jumped 59 per cent this year, eclipsing the 43 per cent gain by Hong Kong Exchanges & Clearing Ltd - the world's biggest exchange by market value - even as the latter surged 10 per cent on Tuesday (July 21) after billionaire Jack Ma's Ant Group announced plans to seek a dual listing in Hong Kong and Shanghai. Shares of the Malaysian exchange rose as much as 0.4 per cent as of 9:06am local time on Thursday.
Similar to the trend in many other countries, individual investors have piled into the South-east Asian stock market to scoop up battered shares in the wake of the global pandemic, spurred by government stimulus and record low interest rates. An unprecedented rally in glove makers also fueled the fevered buying, sending overall trading volumes to a record 12.5 billion shares on Monday.
"Retail participation continues to chalk new highs and their net buying momentum hasn't diminished," said Jeremy Goh, an analyst at Hong Leong Investment Bank Bhd in a recent note. The exchange will deliver record profit of RM80 million (S$26 million) in the second quarter, he said, adding that average daily trading value has jumped 86 per cent in that period.
A big part of the trading frenzy in Malaysia has been helped by the meteoric rally in the shares of glove makers. More than $1 of every $10 invested in the nation's stock market right now is a bet on gloves due to the supernormal demand for hygiene products during the pandemic.
That has in a way shielded the exchange's shares from the volatility seen in equity markets globally and at home this year.
While liquidity can evaporate as fast as it came in, Mr Goh said that there are encouraging signs it may sustain for the rest of the year. He has raised his earnings estimates for Bursa Malaysia for this year by 10 per cent ahead of the company's results due late July. Goh expects the bourse to report a record quarterly profit.