Efforts have been made by the Government to make our local stock market, Bursa Malaysia, more attractive to foreign investors.
The main initiative is by making more shares from government-linked companies (GLCs) available to foreigners. For starters, Khazanah Basional Bhd has announced to divest 32% stake in Pos Malaysia Bhd. In addition to this, Khazanah has sold down stakes in Tenaga Nasional Bhd, Malaysia Airports Holdings Bhd and PLUS Expressways Bhd in the last 9 months.
While Bursa Malaysia has been aggressive in pursuing foreign listings, the group’s chief executive officer Datuk Yusli Mohamed Yusoff insists that they will not compromise on the quality of companies, out of desperation. He said, “Our objective remains to have quality companies listed on our bourse and that is in our long-term interest.”
He stressed that the same standards of governance and disclosures applies to China. This was in response to the negative perception Malaysian investors had on China listings.
Bursa Malaysia wants foreign stockbrokers in Malaysia to serve local retail investors.
Currently, only 25% of the total volume transacted on Bursa Malaysia is attributed to retail investors, which is below the average seen in emerging markets. According to the group’s chief executive officer Datuk Yusli Mohamed, the industry could benefit in terms of service level and new product development.
At the present time, most of the foreign brokers in the country only serve domestic and foreign institutional business. According to the Securities Commission website, the six foreign stockbrokers operating in the country include CLSA Securities, UBS Securities, Credit Suisse Securities, Macquarie Capital Securities, Nomura Securities and JP Morgan Securities.
Following Budget 2008, three new stockbroking licenses were to be issued out to leading foreign firms, based on decisions to liberalise the sector. In January, Citigroup was one of the three companies that won a license.
In addition, there are currently seven local stockbroking companies, 14 investment banks, six stand-alone stockbroking firms, and one universal broker.
Yusli believes that foreign brokers would create more competition in a sector traditionally dominated by local stockbrokers, which would be healthy for the industry.