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.
Other than increasing GLC’s shares, the government is also floating new ones in the local market. For example, two subsidiaries of national oil giant Petroliam Nasional Bhd is slated to be up for listing this year.
Companies like Percetakan Nasional Malaysia Bhd, CTRM Aero Composites Sdn Bhd, and biotech firms Nine Bio Sdn Bhd and Innobio Sdn Bhd, as well as a number of other companies under the Minister of Finance and other agencies, are also being reviewed by the government for privatization.
CTRM, a government owned company, and probably Asia’s largest manufacturer of composite aerospace, declared they were ready for public-listing. The company made an annual turnover of about RM300mil, while net profit for the year was around the region of RM30mil.
With these efforts, the government hopes to boost the percentage of foreign investment in Bursa Malaysia, which currently comprises of 26%, a drastic fall from 42% recorded in 2008, according to official figures.
Prime Minister Datuk Seri Najib Tun Razak said in his speech to launch the New Economic Model in March this year, that 50% of the daily Bursa volume is made up of the trading of Employees Provident Fund (EPF) in local equity and bond markets, a situation which he described as unhealthy for the market and for EPF. The fund size of EPF totals RM360bil, of which a quarter is invested in Bursa Malaysia. Presently, the total market capitalisation of all companies listed on Bursa Malaysia amounts to around RM1.06 trillion.
As such, EPF will invest more assets overseas and diversify its portfolio, thereby creating more investment opportunities for other participants. Also EPF is set to make more direct investments in the real economy of Malaysia as an alternative to market investments, such as in healthcare, commodities, property and other long-term investments.