Najib announces measures to boost investors’ participation

Stamp duty on shares of mid and small cap firms traded on Bursa will be waived effective March


STAMP duties exemption for trading of shares, liberalisation of financing rules and trading link between stock exchanges of Malaysia and Singapore — were among key measures announced by Prime Minister Datuk Seri Mohd Najib Razak at the World Capital Market Symposium (WCMS) 2018 yesterday.

He said that the measures will enhance value recognition and vibrancy of the capital market, as well as to encourage greater investor participation.

To encourage greater recognition of the small and mid-sized companies, Najib said stamp duty on shares of mid and small cap companies traded on Bursa Malaysia will be waived, effective March 2018, for a period of three years.

“We have more than 350-listed mid and small cap companies with a total market capitalisation of RM217 billion, accounting for more than a third of companies listed on Bursa Malaysia,” he said, followed by thunderous applause from the 1,000 strong audience.

Najib, who is also the finance minister, said Singapore and Malaysia have agreed to establish a market corridor connecting both countries with a trading link between the respective exchanges to further spur mutual benefits and harness the economic potential of both economies.

The Monetary Authority of Singapore and the Securities Commission Malaysia (SC) will work together to facilitate the establishment of a stock market trading link between Bursa Malaysia and the Singapore Exchange by the end of this year.

“A regulatory arrangement will be worked on by the countries’ relevant regulatory authorities to pave way for the establishment of this trading link,” he added.

The trading link, now codenamed “Malaysia-Singapore Connect”, will provide investors on both sides of the causeway with easier and seamless access to each other’s markets with a combined market capitalisation of over US$1.2 trillion (RM4.8 trillion) and 1,600 public-listed companies (PLCs).

“After discussions with Prime Minister Lee (Hsien Loong), I am glad to say that we have agreed that both markets have reached a sufficient level of sophistication and degree of maturity for us to establish a market corridor connecting Malaysia and Singapore,” he added.

Najib also said margin financing rules will be liberalised further to make the Malaysian capital market more attractive. While opening intraday short selling to all investors, Najib said a new category of traders who trade on their own account known as “trading specialists” will also be introduced.

A volume-based incentive programme will be introduced by Bursa Malaysia to catalyse greater trading activity, and all new investors will be given a fee waiver on trading and clearing fees for six months to encourage more participants to trade on the local market.

“These are just some of the steps we are taking to ensure that we do indeed participate in a renaissance of capitalism and that our growth is shared by all,” he stressed.

Najib said to further enhance investor participation, the SC will facilitate more digital intermediaries, such as digital investment managers, digital brokers and digital trading platforms.

“This introduction of digital innovation is vital to ensure the continued growth and global competitiveness of our capital market,” he said.

Meanwhile, Najib said the government will introduce a policy to push all government- linked companies (GLCs) to contribute a minimum of 1% of annual pretax profits to social and environmental causes.

“That would make a big difference to the lives of many, as that 1% from just the top 100 PLCs would translate into more than RM1 billion going directly towards the society.”

He said GLCs can and should play a bigger role in making a positive contribution to the society.

Najib said the Malaysian capital market has grown steadily over the last few years to RM3.2 trillion, with average fund raising of more than RM110 billion annually.

The fund management industry manages more than RM760 billion in assets under management and Malaysia is also recognised as a leader in the Islamic capital market area, particularly in the areas of sukuk and Islamic funds.

“This is a testament to the efforts of our regulatory authorities in creating a facilitative environment for innovation in the capital market, and a reflection of the confidence of both domestic and foreign investors in our economy,” Najib said.

In a related development, SC chairman Tan Sri Ranjit Ajit Singh said the regulator expects up to RM120 billion to be raised this year from the Malaysian capital market through various market segments, including the bond market.

“Over the past 25 years since the SC’s establishment, the Malaysian capital market has witnessed a tremendous period of growth.

“Today, we have one of the largest capital market in the region of 2.4 times of gross domestic product with a total size of RM3.2 trillion,” Ranjit said.