Malaysia’s government and Bursa Malaysia confirmed on March 22, 2020, that they will not suspend stock trading despite a nationwide lockdown imposed on March 18 to contain the coronavirus pandemic. The decision came after the Association of Stockbroking Companies of Malaysia urged authorities to shut down the exchange to prevent a market collapse. Regulators argued that a suspension would create greater uncertainty for investors.
The Association of Stockbroking Companies of Malaysia, representing brokerage firms, pushed for an immediate halt to trading. Chairman Azman Manaf warned of severe long-term damage.
“Bursa Malaysia should be suspended for the time being as a defensive measure to protect the stock market from suffering severe damage that could take almost a decade to heal,” Manaf said. The association feared that continued trading amid a global pandemic and domestic lockdown would trigger a sell-off. Malaysia’s benchmark index had already fallen sharply.
By March 18, market capitalization dropped to RM805 billion, a 23% decline from the end of 2019, according to Malay Mail. On March 19, the stock index hit its lowest level since 2009.
Bond yields rose 61 basis points in two weeks to 3.37%.
Regulators reject suspension as a solution
The Securities Commission and Bursa Malaysia pushed back. They argued that closing the market would not address the underlying turmoil caused by the pandemic. “We will maintain continuous trading and market operation, to facilitate investors to manage their risks and opportunities during this period,” the authorities said in a joint statement.
Regulators contended that a shutdown could amplify panic. Investors would lose the ability to adjust positions.
That could lead to a backlog of sell orders when trading resumed. The authorities also noted that other major exchanges, including those in the United States and Europe, remained open during their respective lockdowns.
Business continuity measures already in place
Before the lockdown began, regulators introduced contingency plans to keep the market running. These included backup sites, recovery facilities, and alternative communication channels. The measures aimed to ensure that trading could continue even if key staff were unable to work from primary locations.
The Securities Commission and Bursa Malaysia said they would monitor trading activity closely. They vowed to launch additional precautionary measures if needed.
The goal was to manage risks without disrupting market access.
Economic context of the lockdown
Malaysia was the hardest-hit country in Southeast Asia by COVID-19 at the time. The government imposed travel restrictions, closed non-essential businesses, and suspended classes nationwide starting March 18. The lockdown aimed to slow the spread of the virus but also disrupted economic activity.
The stock market decline reflected broader economic uncertainty. Investors worried about falling demand for Malaysian exports, lower oil prices, and reduced domestic consumption.
The bond market also showed stress, with yields rising as investors demanded higher returns for risk.
Comparison with other markets
Malaysia’s decision to keep trading open aligned with the approach of many other countries. The New York Stock Exchange and London Stock Exchange both remained operational. Some markets, like the Philippines, temporarily suspended trading during their lockdowns.
That created a mixed picture for global investors. The Malaysian regulators emphasized that an open market allowed investors to rebalance portfolios and manage risk.
They argued that a suspension would only delay the inevitable adjustment and could worsen the eventual sell-off.
Conclusion
The standoff between the stockbroking association and regulators highlighted the difficult trade-offs during a pandemic. The association saw a shutdown as a shield against panic. Regulators saw it as a source of greater uncertainty. By keeping Bursa Malaysia open, the authorities chose continuity over protection. They bet that allowing investors to trade freely would prevent a deeper crisis. The coming weeks would test whether that bet paid off as Malaysia’s economy and markets faced the full force of the coronavirus pandemic.
