Keep local market as 1st option to raise capital, says Kenanga

Some Malaysia-based companies have of late opted to list on exchanges abroad


Malaysia-based companies seeking to raise capital should make Bursa Malaysia Bhd the initial option in order to make the country’s capital market vibrant, said Kenanga Investors Bhd CEO and ED Ismitz Matthew De Alwis.

“Local companies now often make their maiden listing regionally, such as on the Stock Exchange of Hong Kong Ltd (HKEx) or Singapore Exchange Ltd (SGX), and they have the right to do that.

“We are of the view they should make Malaysia as the initial platform for fundraising to deepen the capital market and enhance its vibrancy before the companies sub-list in other markets,” he said at the Annual Signature Financial Planning Symposium 2018 in Kuala Lumpur yesterday.

Some Malaysia-based companies have of late opted to list on exchanges abroad due to easier and faster excess to market and valuations.

For example, Sapura Energy Bhd is reported to be interested in listing its upstream business on the Australia exchange due to prospects of improved valuations, while PRG Holdings Bhd listed its unit on the HKEx due to its business links to the Greater China market.

With regard to Malaysia’s plan to connect the local bourse with SGX, which was proposed earlier this year under the previous administration but put on hold, De Alwis said the proposed connectivity should include other regional markets as well.

“I think it would be more beneficial if the plan involved other Asean members instead of linking up with one member. Perhaps, it could be an Asean stock market.

“However, we have to ‘furbish our own house’ first before attempting an integration with other countries,” he added.

Recently, Finance Minister Lim Guan Eng said the government, together with Bursa Malaysia and the Securities Commission Malaysia (SC), is looking to connect the local market with other regional bourses following the shelved Malaysia-Singapore stock market trading link plan.

Lim said it would provide a wider market capitalisation opportunity. De Alwis said fund managers remain cautiously optimistic the FTSE Bursa Malaysia KLCI will surpass the 1,800-point level by year-end amid uncertainties in global markets.

“We should be able to reach 1,780 points by October or November, which we have come quite close to recently. And the next ceiling after that is 1,800 points.

“Reaching the target is beyond theBursa rebounds to end higher 16 local political agenda, as the geopolitical and regional issues such as the US-China trade dispute are more concerning,” he said.

De Alwis expects buying by fund managers returning from their summer holidays and escalation of trade disputes could have an impact to the benchmark index amid the tabling of new budget under the new administration.

“Some of the blue-chip stocks are quite stabilised, but there are a lot of gems in the small-to-mid caps level.

“For example, some of our in house-bred technology counters are doing pretty well, while some of the manufacturing stocks’ price earnings ratios are interesting at this moment,” he said.

De Alwis, who is also the president of Financial Planning Association of Malaysia (FPAM), said the financial sector is currently waiting for clarity on the Sales and Services Tax (SST) implementation to better position themselves in terms of pricing strategy.

“On the products at the investment level, we have not been clarified on the taxed items within our sector. Considering the previous SST period, some of the products such as unit trusts and other investment products were not taxed or had been zero-rated. The same products were taxed under the Goods and Services Tax.

“We are waiting for the government to present a proper documentation for products and services in the financial sector. It is all still grey to us right now,” he said.