CAPITAL market players and observers have generally welcomed the new measures unveiled by the government to boost the market, but they do not expect an immediate effect given the current global uncertainties and poor market sentiment.
Also, they are more positive on some of the measures, and less so on others.
Below are some comments from various segments of the market.
The Association of Stockbroking Companies Malaysia (ASCM) believes the measures would have a positive impact and translate into “heightened activity” on the KLSE. The reduction in board-lot size would create a more affordable entry point while the capping of stamp duty charges to RM200 would also lower the transaction cost for investors.
The ASCM and remisiers said they welcomed the move to review commission rates, but stressed the importance of enforcement.
ASCM chairman Yusli Mohamed Yusoff said: “It is important to note that while stockbrokers have been requesting for the setting up of a minimum commission rate structure, the paramount issue of effective prescribed enforcement must also be provided for, hand in hand.”
A broker further argued that for the market to be truly liberalised, it should determine the rate rather than having a “floor” or minimum rate set.
The association also hope that other “unhealthy trade practices” could be overcome with the active assistance and effective participation of the Securities Commission and the KLSE. A remisier said these practices included the “pinching” of remisiers and offering rebates to clients.
Corporate officials were generally ambivalent about the new measures. One senior corporate official said while the government was desirous of having a vibrant and dynamic capital market, it needed to do a lot more to address the issue of investor confidence.
She also said that creating bigger companies through the merger of government-linked companies might result in the smaller companies being ignored by investors.
The mismanagment scandals involving public agencies had damaged investor confidence, she added.
KLSE executive chairman Datuk Mohd Azlan Hashim said the new measures showed “the commitment of the government in forgoing revenue to ensure a cost-effective securities trading framework.''
On the standardisation of board lots, he said the move would help reduce the number of odd-lot trades and broaden the market's appeal to a wider spectrum of investor. It would also help improve trading liquidity in currently high-priced stocks.
Fund managers/ investment analysts
The 10 measures announced are seen unlikely to spark an overnight surge in investing interest in the KLSE. However, they are expected to yield long-term results in terms of improving efficiency and liquidity in the capital market.
“The measures are steps in the right direction to address the inefficiency and liquidity problems. But we will not see an immediate impact on the stock market,'' said HLG Asset Management chief investment officer Ivan Tham.
He said the reduction of the moratorium period on promoters' shareholdings in all IPOs and reverse takeover would help increase the free float of shares on the exchange.
But concerns were expressed by others that the move would provide a “faster exit'' for those in top management and thereby negatively effect on the operations of a company.
TA Securities head of research C.K. Ngu noted that certain measures being introduced were the proposals submitted by the stockbroking community. “This shows the authorities' willingness to listen to the industry players,'' he said.
Ngu also said that the move to merge government-linked companies might spark speculation on the identities of the companies.
“But given the current cautious sentiment, speculative interest in those counters may not be great or sustainable,'' he added.
OSK Research assistant general manager Pankaj Kumar expects to see mergers in the plantation, insurance and banking sectors.
Merchant bankers/deal advisors
Shorter processing time and fewer approvals required from the authorities will definitely smoothen the corporate exercises of public listed companies, in the view of those providing corporate advisory services/
They are pleased that the SC would also process corporate proposals based on Foreign Investment Committee (FIC) guidelines from today, thereby cutting red tape and and shortening the approval period.
This change, however, is only applicable to cases for which both SC and FIC approval is required. In cases where the SC's approval is not required, applications will continue to be made directly to the FIC.
The reduction in IPO processing time is also seen as a good measure to encourage more such exercises.
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