How well does Bursa fare against other regional stock exchanges?

Local companies are now more aware of the opportunities available beyond Malaysia’s stock exchange


LATELY, there seems to be a new trend and keenness among Malaysian companies to be listed on foreign exchanges instead of being traded on Bursa Malaysia.

Bloomberg recently reported that Sapura Energy Bhd was considering to list its exploration and production business on the Australian stock exchange in a float that could be worth as much as A$2.7 billion (RM8.1 billion), as cited by sources to The Australian.

Sapura was said to have engaged Bank of America Merrill Lynch on the potential listing.

Meanwhile, Pentamaster Corp Bhd — a Penang-based automation solutions provider — is also looking to list its automated solutions business, Pentamaster International Ltd, on the main board of Hong Kong Exchanges and Clearing Ltd (HKEx).

In October last year, PRG Holdings Bhd’s manufacturing arm Furniweb Holdings Ltd debuted on HKEx at HK$0.64 (33 sen), up 28% from its initial public offering price of HK$0.50.

As it is, there are more than 10 Malaysian firms listed on HKEx — including Parkson Retail Group Ltd, Genting Hong Kong Ltd, Media Chinese International Ltd and Guoco Group Ltd.

An equity expert told The Malaysian Reserve (TMR) that local companies are now more aware of the opportunities available beyond Malaysia’s stock exchange as these markets are active on promotion.

“There is a greater awareness now among company owners for the destination of listing and the opportunities out there as investment bankers across Asia and all over the world are promoting their markets,” the source said.

The source said the geographical factor is also another reason for companies to choose to be floated abroad as part of expansion and greater exposure in the preferred countries, apart from enjoying better valuations.

The source said liquidity in the local stock markets is improving these days, and the perception that local retail investors are shying away from investing in the local stocks is unfounded.

The source said there was hardly any under subscription among counters that are listed on Bursa Malaysia over the last two years.

On another note, Areca Capital Sdn Bhd CEO Danny Wong told TMR that Malaysia is still a developing country and the financial literacy among its citizens might not be as advanced as other nations.

He added that there is a perception that the local stock exchange is “over-regulated” compared to its counterparts.

“Bursa Malaysia has done quite a fair bit of things to attract foreign companies. But it is mainly the red tape as some of the companies may view us as over-regulated, for example, in the environmental, social and governance area,” he said.

Wong said local companies could possibly be looking for listings outside Malaysia based on the more attractive currency exchange as there is no need to hedge the currency when raising the funds overseas.

Overall, Wong said regional stock exchanges would eventually harmonise — especially in terms of regulations.

“Eventually, some of the differences in law will harmonise over time. For instance, Singapore’s market is more advanced and open compared to us, but the regional markets may converge into a single or more similar kind of rule in the future,” he added.

Apart from foreign listings, some companies are weighing on the options of dual listings with other stock exchanges.

Companies such as Malaysia Smelting Corp Bhd and IHH Healthcare Bhd have successfully had their stocks listed in Malaysia and Singapore.

Rakuten Trade Sdn Bhd head of research Kenny Yee said at the end of the day, retail investors’ attitude towards all the counters would still be determined by the sentiment of the markets and performance of the companies.