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Market Daily Report: Bursa Malaysia Closes Higher On BNM’s OPR Decision, Wall Street Gains

KUALA LUMPUR, Nov 5 (Bernama) -- Bursa Malaysia closed higher, buoyed by Bank Negara Malaysia’s (BNM) decision to maintain the Overnight Policy Rate (OPR) at 2.75 per cent, alongside positive cues from Wall Street. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) rose 19.30 points, or 1.19 per cent, to 1,635.86 from Wednesday’s close of 1,616.56. The benchmark index opened 6.72 points higher at 1,623.28, and fluctuated between an intraday high of 1,642.44 and a low of 1,622.62 during the trading session. However, market breadth was negative, with losers outnumbering gainers 723 to 497, while 466 counters were unchanged, 1,075 untraded and 10 suspended. Turnover rose to 3.74 billion units valued at RM3.61 billion compared with yesterday’s 2.81 billion units valued at RM2.57 billion.
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ETF Industry Sees Boom in Launches Amid Record Closures in 2024

The US exchange-traded fund (ETF) industry, valued at $10.4 trillion, witnessed an eventful 2024, marked by record inflows and fund launches alongside near-unprecedented closures. Here's an overview of the year's key trends:

A Mixed Bag: Record Launches and Closures

  • Closures: Nearly 200 ETFs shut down in 2024, approaching early-pandemic termination rates.
    • Funds focused on ESG themes, China, and cannabis saw significant closures.
  • Launches: Over 700 new ETFs debuted, marking a record second-consecutive year of launches.
    • Successful launches included Bitcoin and Ether spot ETFs and leveraged single-stock ETFs targeting popular stocks.

Saturated Market Challenges

  • The US market now hosts 3,900 ETFs, making it increasingly difficult for new funds to achieve scale.
  • Many ETFs fail to meet the asset and trading thresholds required by institutional investors and trading platforms.
  • The timeline for success has shortened significantly, with new funds now expected to show promise within 18 months, compared to three years previously.

Factors Driving the Boom

  1. Regulatory Changes:
    • Securities and Exchange Commission rule updates in 2019 and 2020 eased the creation of actively managed and derivatives-based ETFs.
  2. White-Label Issuers: These firms streamline ETF launches, reducing the barriers for entrepreneurs to bring products to market.

The Fee War and Rising Costs

  • Fierce competition among issuers has intensified a fee war, squeezing profit margins.
  • New ETF issuers need at least $250,000 in working capital for the first year, excluding marketing expenses.

Success Stories: Niche Appeal

  • Niche products, such as leveraged ETFs tracking MicroStrategy Inc. and single-stock ETFs from firms like GraniteShares, have thrived.
  • Retail-focused marketing has proven more effective for many new ETFs compared to targeting institutional investors.

Outlook: Growing Challenges

  • The ETF landscape continues to evolve, with barriers to entry lower than ever, but barriers to long-term success growing steeper.
  • With more entrants and tighter competition, navigating the ETF market in the coming years will demand precision, innovation, and strategic marketing.
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