KUALA LUMPUR: Bursa Malaysia's stock market has been on a gradual recovery in recent months, but trading activity suggests investor caution remains, according to the exchange's latest statistics.

The benchmark FTSE Bursa Malaysia KLCI (FBM KLCI) has posted gains for four consecutive months, rising from 1,513.65 in March to 1,548.99 as of July 3.

Over the same period, total market capitalisation increased by more than RM60 billion, from RM1.87 trillion to RM1.93 trillion.

However, this rebound in valuations has not been matched by liquidity.

In June, the total value of shares traded on Bursa Malaysia dropped to RM43.1 billion, the lowest monthly figure in over a year.

That marks a decline of more than 60 per cent from RM109.3 billion recorded during the peak in July 2024. Market volume has also fallen, from 109 billion units to 59 billion.

There was a pickup in early July, with RM5.2 billion in turnover on July 3, one of the highest daily totals so far this year.

However, with only a few trading days into the month, it remains too early to tell whether this signals a sustained shift in sentiment or a temporary uptick.

While the rise in capitalisation may point to renewed institutional interest or selective accumulation of blue-chip stocks, the declining participation rate suggests that many investors, particularly retail players, remain cautious.

This comes against a backdrop of subdued global risk sentiment, persistent inflationary pressures and continued capital outflows from emerging markets.