This article first appeared in Wealth, The Edge Malaysia Weekly on April 25, 2022 - May 1, 2022
Female participation in the stock market had, for the longest time, been lagging that of the males. Often, the reason given was that female investors were less active and not as savvy as the men. But this kind of stereotyping is being debunked.
Women, in fact, are emerging as a growing force in the investing space. Bursa Malaysia statistics show that new Central Depository System (CDS) accounts opened by female investors surged in 2020 when the Covid-19 pandemic started raging throughout the country. New accounts that year were 85,094, a 110.63% year-on-year increase from 40,398.
In 2021, new CDS accounts opened by female investors fell 10.48% y-o-y to 76,164. But the total number was still impressive compared with the pre-pandemic period. From 2015 to 2018, new accounts opened by females hovered between 30,000 and 40,000 each year.
In an interview with Wealth, Wong Chiun Chiek, senior executive vice-president and head of Bursa Data Business, says these are very encouraging statistics. He adds that the average daily traded value (ADTV) of female investors also increased significantly in 2020 and 2021 to RM799.7 million and RM712.4 million respectively. The ADTV of female investors were RM258 million and RM239.5 million in 2018 and 2019 respectively.
“Key [structural] factors that contributed to such a trend are more females joining the workforce in recent years and a rise in their income level. Improved financial literacy and better knowledge of wealth management also played a part,” he explains.
What is more interesting, however, is that investment returns generated by overall female investors tend to outperform that of their male counterparts, says Chiun Chiek, adding that this debunks the perception that women investors are less savvy.
“Many studies have shown that female investors outperform males when investing in the stock market. In fact, one of our studies conducted on active investors during the MCO (Movement Control Order) periods showed that locally, the realised gains of female investors were higher than male investors.”
This phenomenon also happened in the US, according to Fidelity Investment’s 2021 Women and Investing Study that involved 2,400 American adults. The survey shows that half of the females surveyed were more interested in investing since the start of the pandemic, and when they did, they did better than males. It pointed out: “New analysis of more than five million Fidelity customers over the last 10 years finds that on average, women outperformed their male counterparts by 40 basis points or 0.4%.”
Interestingly, the survey noted that despite their overall outperformance, female investors were less confident in long-term planning and investing than the males. This could actually be a reason for their better performance as they tend to be more cautious in investing and are less speculative as a result, says Chiun Chiek. “Female investors tend to try and understand companies’ fundamentals before they start investing.
“On average, less than 20% of the total traded value of female investors [locally] goes towards the top 15 active stocks in the market. This suggests that most female investors do not blindly follow market trends or are not as heavily influenced by market movements. They prefer to be more practical and adopt a research-based approach when investing in the stock market.”
Chiun Chiek adds that female investors who selectively diversify their investments across sectors and regions tend to enjoy higher returns than those who do not.
Yet, he says people should not look at female investors as a homogenous group, as shown by Bursa’s analysis. “We should not automatically assume all female investors behave the same way and go through similar trading experiences. The development of modern technology and data science today is particularly useful to let us analyse and understand investors’ behaviour without bias or preconception tied to traditional stereotypes.”
Moving forward, Chiun Chiek sees huge potential among bumiputera female investors as, currently, about two-thirds of them trade only small numbers of shares in the market. “It is also observed that their traded value in micro-cap, small-cap and mid-cap stocks have increased over the years. There is the potential [for Bursa] to increase their participation further in blue chips and large-caps stocks.”
The overall participation of young female investors in the stock market is expected to rise steadily in the years to come, based on the observation of Wong Chui Ling and Lee Ching Poh, both speakers at Bursa’s Ring the Bell for Gender Equality webinar held on March 8, International Women’s Day.
Chui Ling, a Malaysia-based TV host, radio personality, entrepreneur and investor born in Hong Kong, expects more young female investors to join the stock market due to economic, societal and cultural changes. She said Gen-Z female investors born between 1997 and 2012 are more exposed to the capital market than the older generation, thanks partly to the internet. “Many of them are participants in the gig economy and have to constantly explore new ways to increase their income, including investing in shares.”
Lee, a young equity research analyst at CGS-CIMB Securities Sdn Bhd, concurred with Chui Ling. “The stock market is more vibrant and liquid as compared with other asset classes, which makes it appealing to the younger investors. The low entry barrier of only RM100 is another plus point. Females nowadays are becoming more financially independent, with many of them making their own decisions on how to invest,” she says.
Emergence of young investors
Lee Ching Poh, 24, is an equity research analyst with CGS-CIMB Securities Sdn Bhd. Only a few people know that it was the Hong Kong dramas that piqued her interest in the stock market.
“I come from a Cantonese background and watched a lot of Hong Kong dramas like Dai Si Doi (The Greed of Man) with my family. That was how I got intrigued by the stock market early on and developed an interest in it,” she says.
Lee would later enrol at Sunway University and graduate with a degree in financial analysis. Having spent over a year in the financial industry, she enjoys analysing companies using fundamental and technical analysis to this day.
“My passion led me to this role, even though I’m not allowed to invest directly in the stock market due to conflict of interest,” she says.
Based on her observation, more Gen Z female investors are participating in the stock market, especially since the pandemic hit, when they were locked up at home with little to do.
“An increasing number of my friends started talking about the stock market during our catch-up sessions in the past two years. We would talk about companies that caught our attention and share views on various issues, such as the war between Ukraine and Russia, and how it could affect the market,” she says. “Most of my friends invest in the stock market mainly to protect their wealth against inflation and generate passive income.”
Technology plays a critical role in introducing and attracting young investors to the stock market, says Lee. “People are getting comfortable with all the convenience provided by technology and the internet, including investing through various mobile applications. Investing in shares is just a few taps away with the smartphone.”
Lee observes that some of her friends plunged straight into the stock market by investing directly in various companies that they found to be good, while others started with robo-advisory platforms that invest their money in exchange-traded funds (ETFs).
She opines that a robo-advisory platform is an attractive option for young investors to kick-start their investment journey as it combines investing with technology. It provides them with good user experience and unique features.
“Some of my friends would do both by investing directly in the stock market and through robo-advisory platforms. They would compare the returns on both sides to see which is better.”
Asked if she agrees that female investors tend to be more conservative than males due to a lack of confidence, Lee says no. “I can’t say for sure with regard to the confidence level. But I do have friends who have a high level of confidence and invest more actively and aggressively.”
As for the 0.4% outperformance of female investors against males, as pointed out by the Fidelity Investment’s 2021 Women and Investing Study, Lee says the amount is negligible. “After all, investors are driven by various common factors such as emotion, including greed and fear, financial knowledge and the amount of cash they have. In my view, we don’t need to look too much into gender regarding investing. The more people joining the investment community, the better. The more, the merrier,” says Lee.
The Hong Kong experience
Wong Chui Ling was born in Hong Kong, the former British colony that is now a part of China. She lived there for over two decades before coming to Malaysia to become a successful TV host and radio personality. Today, she is also an entrepreneur who runs a communication company and postnatal care centre.
“The decade during which I grew up in Hong Kong was the most beautiful 10 years in my memory. Everything seemed so good. And you wanted to be as good as everybody else,” Chui Ling tells Wealth in an interview.
However, it was also an intensely competitive environment where everybody wanted to be successful and wealthy. And they wanted it fast. That was partly why many people in Hong Kong were fixated with the stock market and its daily movements.
The passion of the Hong Kong people for the stock market continues today. Last August, a survey by US-based personal finance site Finder ranked the special administrative region as the first out of 16 countries that had the highest number of retail investors participating in the stock market in 2020.
The survey showed that 53% of adults in Hong Kong bought shares in 2020, slightly higher than Singapore (around 53%), and much higher than the US (43%) and the world’s average (34%).
Investing in the stock market is akin to a national movement in Hong Kong that involves both males and females, even during the early 1990s, says Chui Ling. “The gender concept didn’t exist. We hardly heard people saying that females do this or males do that. Everybody got to work and shared the passion in investing. Both genders had equal opportunities in everything, including access to the stock market.”
A good example would be her mother, a housewife and investor who remains very active in the stock market today. “Investing and trading the stock market is like a full-time job to her. At 9.30am, she would switch on her devices [and trade the market] until 4.30pm. She would probably have a break for dim sum from 12.30pm to 2pm when the market is closed. At night, she studies the US market. She can make HK$10,000 to HK$15,000 a month, it is not bad.”
Influenced by their mother, Chui Ling and her two sisters were exposed to the share market even when they were young. But it is her older sister who inherited her mother’s more aggressive investment style. “For all the ups and downs in the China market, my sister went quite big into Tencent [Holdings Ltd]. She believed the share price of the tech giant will fly again. My mom and I thought she was really a hardcore supporter of the China market,” she quips.
As for herself, Chui Ling invests mostly in mid- to low-risk stocks as most of her capital is tied-up in the businesses she is running. She also has a family to take care of, her two children have just enrolled in an international school.
Any gains she obtains from the “medium-risk shares” she holds are considered a bonus that will fund her family trips and hobbies. “For instance, we plan to go back to Hong Kong in June this year if the investments pan out well. I would like us to be quarantined at the Landmark Mandarin Oriental for a week or two, depending on the city’s quarantine policies then.”
Overall, she is satisfied with the performance of her investments. She agrees that it is partly due her female characteristic of being more cautious and patient. She finds that some males tend to be more short term for quick gains, sharing this anecdote: “They would go into this one stock and make, let’s say, HK$100,000 in a week and use the money to buy a luxury watch. They would show it off to friends saying that the watch was a gift from the stock market. A week later, they would return to the same friends and say they actually paid for the watch themselves as they had lost all the money in the market.”
Some of her female friends continue to hold on to their China unit trust funds that suffered from losses recently, hoping for recovery. But her male friends mostly sold off their units to cut losses. “Male investors tend to cut losses fast, stem the bleeding and invest the remaining money elsewhere. Keeping their money with the losing funds is an opportunity cost.”
Yet, regardless of gender, there are always valuable lessons that investors can learn from experience. A basic yet essential one Chui Ling learnt is to differentiate investment from speculation and that one should always stay humble.
She recalls Hong Kong in the 1990s, when she started her career in the city’s booming entertainment industry. She was paid HK$12,000 a day and saved enough to invest in properties in the outskirts.
“Those days, we paid a 30% down payment to buy a property. If we sold it within a month, we didn’t need to pay specific fees such as legal and stamping fees. Many people were flipping their properties and doing so well! I was one of them, earning good money while my friends were management trainees at multinational companies. I thought I was so smart until the Asian financial crisis hit. I crashed and burned.
“That was really a lesson. But luckily, I was very young and managed to sell off all my holdings. I was quite traumatised after that. It took me a while to start investing again, and I became very down to earth. I always remind myself that speculating and investing are two different things.”
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