Retail frenzy to drive stocks gains in South-east Asia: UBS

[SINGAPORE] A boom in retail investing in South-east Asia should help drive stock market gains at a time when institutional investors are reassessing the region, according to UBS Group's investment-banking arm.

"We find ourselves in a very attractive position in South-east Asia" as retail investors deploy savings in capital markets and boost demand for equities, Asean equity research head Ian Douglas Pennant said at a briefing, adding that valuations continue to be cheap and earnings are recovering.

UBS's preferred South-east Asian markets are Singapore and Malaysia, which will benefit from government support and a faster pace of economic recovery. He said he expects South-east Asia's retail trading boom to be sustainable. Among stocks individual buyers have piled into are those hit by Covid-19, including hotels, food and beverage, and malls, he said.

Retail investing craze has become a global trend as more people get bored stuck at home and deposit rates fall to rock bottom. South-east Asian newbie traders have been snapping up a slew of stocks from Malaysian glove makers to Singapore's household banking and property names this year, even as many institutions have stayed away.

So far Asean markets have lagged with institutional investors retreating this year. The MSCI Asean Index is down 22 per cent and trading at just 18 times earnings, while the MSCI Asia Pacific Index is up 1.9 per cent with a 23-time multiple.

South-east Asian retail investors accounted for about 40 per cent of total trading volumes in Thailand and Malaysia this year, up from around 30 per cent last year, UBS estimates. They made up a quarter of Singapore's trading volumes, and under 20 per cent in the Philippines and Indonesia, the lender said.

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