KUALA LUMPUR (Jan 24): The upcoming Capital Market Master Plan 4 (CMP4) will arrive at a moment of sharp contrasts for Bursa Malaysia. The initial public offering segment is running hot, with a steady pipeline of new listings coming to market, yet retail participation remains weak and foreign investors have continued to pull money out.

In 2025, Malaysia’s stock market recorded a substantial foreign net outflow of RM22.32 billion — the largest since the RM24.6 billion in 2020. Foreign shareholding in Malaysian equities fell to around 19%, close to the 2003 trough of 18.1%, underscoring the extent to which overseas investors have pared back their exposure.

The retreat of foreign funds has been offset, at least numerically, by domestic institutions. Local institutional investors were strong net buyers last year, mopping up RM22.16 billion worth of equities, more than double the RM9.94 billion recorded in 2024. Their growing presence has helped cushion market volatility but has also reshaped trading dynamics.

Retail investors, however, have remained largely absent. Retail participation fell to a record low of 18% in 2025, down sharply from the pandemic-era highs of 36% in 2020 and 37% in 2021.

Even pre-Covid-19, the previous low was 20% in 2016. The numbers highlight how fleeting the Covid-19 trading boom was — a brief return of retail investors rather than a sustained re-engagement with the local stock market.

It is against this backdrop that the Securities Commission Malaysia is preparing to unveil CMP4, which will set out a 20-year strategic vision, anchored initially by a five-year action plan covering 2026 to 2030.

The key question hanging over the next reform push is whether CMP4 can meaningfully address the capital market’s long-standing structural challenges.

The Edge examines the shifting behaviour of investors, particularly younger Malaysians who are increasingly allocating their capital overseas.

Easier access to global trading platforms, combined with the appeal of US tech stocks, digital assets and alternative investments, has made offshore markets more attractive than ever. For many, the local stock market is seen as lacking depth, excitement and opportunity.

This shift also casts a spotlight on deeper issues within Bursa Malaysia itself, from liquidity constraints and market depth to the mix and quality of listed companies.

We also review the CMP3, which concluded last year. Did it deliver where it mattered most — in strengthening market vibrancy and sustaining investor participation?

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