KUALA LUMPUR, June 20 ― The stamp duty cut for shares traded on Bursa Malaysia will be beneficial to overall trading activities, particularly for retail investors, said Hong Leong Investment Bank (HLIB).

"We reckon that retail investors are likely to be the main beneficiaries of this proposed stamp duty cut since their trade sizes are mostly below RM1 million.

"We are hopeful that the proposed stamp duty cut will rejuvenate retail investor participation, though it is unlikely to return to the heydays seen during the pandemic,” the research house said.

The measures were announced by Prime Minister Datuk Seri Anwar Ibrahim where the stamp duty rate will be reduced to 0.10 per cent of contract value effective July from the current 0.15 per cent, subject to a maximum cap of RM1,000 per contract.

Besides, Kenanga Investment Bank Bhd (Kenanga IB) said, the lower trading cost could translate to overall higher trading volumes, particularly for retail investors.

"These investors are known to have higher trading frequency and hence are more sensitive to transaction costs.

"That said, the current market conditions may still exhibit weakness as overall macros are marred by possible softness in near-term economic trajectory, persistent inflationary pressures and weakness in ringgit.

Hence, Kenanga IB said these may impede the overall spillover in trading volumes as certain investors may still rather be on the sideline fearing possible downside risks until conditions improve.

The research house said the reduction in stamp duty should not dent Bursa’s profits as it does not benefit from the collection of stamp duties.

HLIB has maintained the FBM KLCI target at 1,500 and ‘hold’ rating on Bursa, while Kenangan IB has maintained the ‘perform’ rating and target price of RM6.25. ― Bernama