Info hub to unlock Asean capital markets’ potential

There is much room for improvement in the promotion of intra-regional capital flows, says CIMB chairman


Tapping into the vast potential of capital markets within the Asean region will help address critical funding gaps, allowing issuers to raise affordable capital at scale and provide investors with viable, diverse options to deploy short-and long-term domestic savings.

To that end, industry experts have suggested forming an information and resources centre on Asean markets that will allow better understanding of investment opportunities across the region.

CIMB Group Holdings Bhd chairman Datuk Seri Nazir Razak said there is much room for improvement in the promotion of intra-regional capital flows.

One of the areas that could be looked into is the lack of a consolidated source of information for potential investors.

“We could create a virtual board — a list of the top companies in Asean — and make it visible across the region.

“This board could have the stocks, the exchanges they are listed on and some guidelines on how to access these securities, with full transparency on how to invest and divest,” he said at CIMB Asean Research Institute’s roundtable on deepening Asean capital markets in Kuala Lumpur yesterday.

Nazir said the board would raise awareness among Asean investors — both the public and institutional bodies — on the possible avenues for investment.

His comments were echoed by Securities Commission Malaysia (SC) chairman Tan Sri Ranjit Ajit Singh, who said creating such an information pool would provide easy access to details on companies available for investment.

“One of the first steps towards deepening capital markets is to create a sort of Asean markets information hub, providing research around Asean companies which are available, without displacing anyone or taking away market share from anyone.

“This hub should also have information about taxation policies and settlement arrangements, to get people more familiar with what’s out there,” he said.

Ranjit added that the hub should not be set up by regulators, although the SC would be able to help form the facility.

“This hub would make it easier for foreign investors who are looking at Asean, to get what they need from one stop instead of going to 10 different exchanges. It should also have information on brokers’ trade execution ability — people don’t realise that there are several brokers within Asean who have licences in multiple countries,” he said.

Ranjit said the information hub, as a market utility, must be formed by a few key players within Asean and could even be led by CIMB Group.

Nazir added that having an equal, minimum level of taxation for all Asean investors would spur intra-regional capital flows, as currently investors from each country are taxed differently when buying bonds from other Asean countries.

The Asian Development Bank has estimated that South-East Asia will require some US$3.1 trillion (RM13.3 trillion) in infrastructure investments through to 2030. According to McKinsey & Co, deeper capital markets in the Asean region could unlock between US$50 billion and US$100 billion in additional financing.

Data from the Asean Capital Markets Forum indicated that Asean capital markets have a combined value of US$3.5 trillion, with a savings rate of 32% compared to the global savings rate of 25%.

Regional capital market integration remains a challenge due to the differences in market maturity among Asean countries.

Deepening individual capital markets would be a prerequisite to addressing the disparity in market maturity and promoting Asean capital market integration.

Meanwhile, Nazir said the country’s gross domestic product (GDP) expansion for the second-quarter of 2017 — which at 5.8%, was the fastest pace in two years — was a pleasant surprise that displayed the strong momentum of the economy.

“For the second-half (2H) of the year, we should dial down our expectations. Most analysts are expecting GDP growth of just above 5%, which means a slightly slower 2H,” he said.