KUALA LUMPUR: There has been a surge in retail participation especially among millennial traders in Malaysia's stock exchange during the Covid-19 crisis.
Rakuten Trade Sdn Bhd acting chief executive officer and chief marketing officer Kazumasa Mise said this can be attributed to the availability of good value stocks due to the state of Bursa Malaysia at the time.
"Many shares were below their historical prices, so it was a good time for new investors to enter the market and weigh their options.
"Like numerous other online platforms which saw a surge in activity, Rakuten Trade also saw a rise in buying and selling of shares on our platform after March 18 this year," Mise told the New Straits Times.
He said about 80 per cent of Rakuten Trade's clients were below 40 years old, with less than three years' trading experience.
Kazumasa said from March 18 to June 30 this year, the company had activated almost 50,000 accounts.
"If one compares this to more than 100,000 accounts activated since our start in May 2017, about half of the total accounts were opened in just four months," he said.
He said Rakuten Trade's completely digital equities trading platform has from the start appealed to those below the age of 40 and in particular those with no prior investment experience — attracting a new segment of investors thus enabling an increase in retail market participation in the country.
"Our millennial traders generally find the ease and convenience of using a 'zero contact' and 'low fees' trading platform as key benefits. The attractiveness and demand for this has only grown tremendously since March 18, 2020," he said.
Since May 2017, the company has contributed almost RM20 billion in total trading value to Bursa
As of June 30 this year, its retail market share stood at almost seven per cent while the clients' assets under trust stood at more than RM1.5 billion.
The company is optimistic that its profitability levels are sustainable in 2020.
"Leveraging on Rakuten Trade's 'zero contact' platform and increase in retail participation on Bursa, we are expecting accelerated revenue growth in tandem with the market's momentum," he said.
Meanwhile, Mise said each of Rakuten Trade's product offerings was targeted at investors with different risk appetites and different trading knowledge.
"Cash Upfront is for the risk averse enabling traders to trade with the cash they have available only.
"The Contra Account caters to those with a moderately higher risk appetite and prefer day trading or settlement within two days post transaction, while RakuMargin appeals to those with higher risk appetite and trading knowledge.
"RakuMargin is our third and latest product offering. It was launched as the country's first automated third-party margin facility just prior to the MCO (Movement Control Order) and has since become increasingly appealing to more experienced traders as it requires zero face to face interaction."
He added that RakuMargin offers an automated facility limit approval of up to RM100,000 and carries the same low brokerage fees as its Cash Upfront and Contra Accounts.