New steps will further liberalise capital markets


News Analysis by LOONG TSE MIN 

AMIDST a flurry of initiatives to spur the development of the country’s capital markets, the Securities Commission (SC) announced on Wednesday various measures aimed at further liberalising these markets. 

The areas that were further relaxed included Bursa listing requirements, rules for the listing of foreign firms as well as merger and acquisition rules for listed companies. 

The initial public offering conference jointly held by Bursa Malaysia and the SC where the announcement was made, was itself one initiative to promote the stock exchange to potential listing candidates, albeit domestic companies rather than foreign ones. 

It would appear that with the latest initiatives, the local stock exchange is seeking greater foreign investor participation and encourage more listings of local as well as foreign companies. 

One head of research at a local brokerage said the move was a good one.  

“But whether it would attract many foreign listings, we would only know after implementation,” he added. 

Currently the most attractive bourses for foreign listings in the region are the Hong Kong and Singapore stock exchanges. 

With Singapore being a close neighbour, comparisons are inevitable and analysts said Singapore had a head start in this department. 

About 40%, or about 200, of the more than 700 companies listed on the Singapore Exchange are foreign companies, which made up 70% of new listings on the exchange this year. 

The most recent foreign listing on Bursa is AEON Credit Service (M) Bhd, a subsidiary of AEON Credit Service Japan. 

AEON is affiliated with the Jusco supermarket brand in Malaysia and should win the interest of investors. 

But can the same be said for a company that does not have any operations in the country, asked a head of research. 

The answer would be a “yes” in Singapore and Hong Kong, but we don’t know yet in Malaysia. 

Another question would be whether the foreign funds would follow these foreign firms to Bursa if they were to list here. 

While Malaysia is liberalising its capital markets, the same is happening in exchanges throughout the region, the head of research pointed out, adding that Malaysia had to run faster just to keep up with Singapore. 

Nonetheless, analysts and investors alike welcomed the move towards liberalisation. Of course, we have to start somewhere. 

This also explains why the capital market authorities have been moving so fast this year. 

Among other initiatives announced earlier this year were the setting up of the Malaysian Investor Relations Association (MIRA) and the launch of the Investor Relations Incentive Programme, both in June. 

Both programmes are aimed at helping companies provide better information to attract the interest of foreign funds. 

This prompted Churchill Pryce hedge fund manager Peter Schiefelbein, who was here on Dec 4 to give a talk to MIRA members, to remark that the association was the “fastest moving and most dynamic” he had seen in any country.  

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