Ajinomoto’s Bursa warning

AJINOMOTO’S proposal to take its Malaysian arm private is more than a delisting story.

It is a warning shot for Bursa Malaysia and for listed company boards that have grown too comfortable watching their stocks become invisible to investors.

Ajinomoto (Malaysia) Bhd is a legacy name on Bursa Malaysia, not a passing foreign listing.

As one of the earliest Japanese companies to set up operations in the country, its presence on the local stock exchange spans more than five decades.

Its Tokyo-listed parent now seeks to privatise the company in a RM603.4mil exercise, citing “minimal benefit” from listing status on Bursa Malaysia and the persistently low trading volumes.

Interestingly, the proposal came about two months after the failed move by Switzerland-headquartered DKSH Ltd to take private its 74%-controlled Malaysian arm.

Like Ajinomoto, the parent DKSH also cited the historically low trading liquidity of DKSH Holdings (Malaysia) Bhd’s shares, as one of the reasons.

At first glance, what happened in Ajinomoto Malaysia and DKSH Holdings may appear to reinforce concerns that Bursa Malaysia is gradually losing multinational interest.

However, the reality is more nuanced.

Foreign-linked listings on Bursa Malaysia generally emerged in two distinct periods.

The first predates 2009, consisting largely of established multinational consumer and industrial companies that listed their Malaysian operations, right from the early days of the local stock exchange.

These included names such as Ajinomoto Malaysia, British American Tobacco (Malaysia) Bhd, Panasonic Manufacturing Malaysia Bhd, Nestle (Malaysia) Bhd, Carlsberg Brewery Malaysia Bhd, Heineken Malaysia Bhd and Aeon Co (M) Bhd.

Many became household names and were widely recognised by Malaysian consumers.

The second phase began in the late 2000s, after Bursa Malaysia eased its foreign listing framework in 2006.

For the first time, companies with their entire operations outside Malaysia were able to seek a Main Market listing, widening the exchange’s reach beyond domestic businesses.

Between 2009 and 2013, that opening brought a wave of mainland Chinese companies to Bursa Malaysia.

What followed later was a different breed of foreign-linked listing.

Lotte Chemical Titan Holding Bhd (LCT) and CUCKOO International (MAL) Bhd came to market not as offshore businesses looking for a Malaysian listing platform, but as local operating companies backed by South Korean parent groups.

Many of the China based listings ultimately failed to gain investor confidence, with some facing governance concerns and disappointing operational performance.

LCT struggled amid industry headwinds and financial challenges. In many cases, the promise of international diversification did not translate into sustainable shareholder returns.

However, the experience of the earlier generation of multinational listings has been very different.

Companies such as Ajinomoto, British American Tobacco, Panasonic, Nestle, Dutch Lady and Fraser and Neave built strong businesses in Malaysia and delivered years of respectable financial performance.

Many of these companies were also easy for retail investors to understand.

Consumers encountered their products daily, creating familiarity and confidence. For decades, such companies represented stable investments that generated consistent earnings and dividends.

However, market dynamics have changed considerably.

British American Tobacco remains one of the country’s most recognised corporate brands, yet its earnings have been under pressure for years as the illicit cigarette market eroded legal sales volumes.

Panasonic’s Malaysian operations have faced slowing demand and a more competitive consumer electronics landscape.

Nestle has had to navigate downtrading trends, changing consumer spending patterns and the impact of boycott related sentiment linked to the Gaza conflict, although earnings have shown signs of recovery.

Dutch Lady and Fraser and Neave continue to demonstrate resilience, but competition has intensified.

The emergence of home-grown Farm Fresh Bhd has reshaped the dairy market and challenged the dominance of established players.

Consumers now have more choices while investors increasingly seek companies with stronger growth narratives.

As these businesses mature, investors inevitably reassess their attractiveness. Strong brands and stable earnings remain valuable, but they are no longer sufficient to command the same market attention they once enjoyed.

Another factor is changing investor preferences.

Many of the multinational companies listed on Bursa Malaysia operate in mature industries.

Their businesses are relatively predictable and defensive. Such characteristics were highly valued during an earlier era when investors prioritised stability and dividend income. Today’s market environment is different. Investor interest has increasingly shifted towards sectors perceived as high growth and innovation driven.

Semiconductor companies, artificial intelligence and data centre related businesses, renewable energy plays, electric vehicle supply chains and technology linked themes now attract a disproportionate share of trading activity.

Against this backdrop, a company such as Ajinomoto faces a difficult challenge.

Despite commanding a dominant position in the monosodium glutamate market and maintaining strong brand recognition, it remains fundamentally a food seasoning company in the eyes of many investors.

The business may be profitable and defensible, but it does not fit neatly into the growth themes currently driving market enthusiasm.

This affects trading velocity and liquidity.

When investor attention gravitates elsewhere, fewer shares change hands. Lower trading activity reduces institutional interest, limits analyst coverage and further weakens market visibility.

The result is a cycle that becomes increasingly difficult to break. For this reason, it would be unfair to place the blame entirely on Bursa Malaysia.

Stock exchanges can create platforms and incentives, but they cannot manufacture investor interest. Ultimately, listed companies bear responsibility for demonstrating why they deserve a higher valuation and stronger market engagement.

Management teams must actively pursue strategies to enhance shareholder value. Greater engagement with analysts and investors is one step.

Clear communication of long term growth plans is another. Exploring adjacent businesses, new markets and opportunities beyond traditional core operations may also help create fresh investment narratives.

The concept of value creation has become increasingly important in capital markets worldwide.

Companies can no longer rely solely on their historical reputation or market leadership. Investors expect evidence of future growth, innovation and strategic relevance.

Nevertheless, Ajinomoto’s privatisation proposal should serve as a warning sign.

The parent company’s comments regarding limited benefits from remaining listed are not unique to Ajinomoto.

Similar concerns may exist among other mature multinational companies whose shares experience low liquidity and limited investor attention.

This is not merely an Ajinomoto issue. It is a broader capital market challenge that deserves reflection from both Bursa Malaysia and corporate management teams.

If established and profitable companies increasingly conclude that public listings offer little strategic value, the implications extend beyond a single delisting.

The question is not whether Bursa Malaysia is losing multinational listings today.

The more important question is whether the exchange and listed companies are doing enough to ensure they remain relevant to investors tomorrow.

If more foreign-linked companies choose to exit the exchange, the damage will go beyond a few delistings.

It will weaken Bursa Malaysia’s ambition to position itself as an international centre for capital formation and make it harder to convince foreign companies that Malaysia is a market worth listing in.