KUALA LUMPUR: iFAST Capital Sdn Bhd expects 20 per cent of Malaysia’s fixed deposit market value to shift to retail bonds within the next five to 10 years.
The country’s fixed deposit market is estimated at RM470 billion currently.
iFAST managing director Dennis Tan said this will be on the back of Securities Commission’s (SC) new bond seasoning framework.
First introduced in September 2018, the new framework allows retail investors to access corporate bonds and sukuk traded on over the counter (OTC) market.
“The traditional bond market has long been dominated by sophisticated investors who can have access to bonds at RM250,000 per odd lot, but even then there is limited availability because standard lots for corporate and government bonds are traded at RM5 million and RM10 million, respectively,” he said.
“With the seasoning framework and what we are offering on our platforms, investors can now invest in investment grade bonds from as low as RM1,000. Coupled with the vibrancy of the market, we expect 20 per cent of the RM470 billion fixed deposit market in Malaysia to shift into retail bonds.”
The Malaysian bond market amounted to RM1.4 trillion as of third quarter 2018, with 60 per cent or RM826 million were sukuk.
Tan said as first market movers, iFAST has the potential to capitalise on this yet untapped retail bond market, despite the risk associated with it.
“iFAST will be the first player to make bonds truly accessible to retail investors with retail bonds being offered from as low as RM1,000 on our platform, FMSOne platform, formerly known as Fundsupermart.com.
“The risk are of course offset by the tremendous opportunity of shifting a sizeable amount of funds from retail investors in fixed income into bonds,” he added.
iFAST is fully-owned by Singapore-listed financial technology firm iFAST Corporation Ltd.