Capital Market Masterplan – SC launches 5 year masterplan

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According to SC chairman Datuk Syed Zaid Albar, the Securities Commission’s third Capital Market Masterplan (CMP3) will serve as a strategic framework for the growth of Malaysia’s capital market over the next five years. Both Capital Market Masterplan 1 (2001-2010) and Capital Market Masterplan 2 (2011-2020) had successfully expanded the capital market while ensuring market stability and integrity over the last two decades. As such, the new master plan now seeks to leverage the strengths and potential of the Malaysian capital market to accelerate economic growth that is sustainable and inclusive. Malaysia is now at a critical juncture in its post-pandemic journey. It is imperative for the capital market to continue to support the economy’s transition into an inclusive and sustainable nation. The progress in the capital market cannot be measured solely by growth and size as it also has to serve underlying needs and aspirations of the country and its people. The CMP3 takes into consideration global megatrends that will shape the recovery and growth of global and Malaysian economies as it steers the capital market towards three desired outcomes, namely being relevant, efficient and diversified. Malaysia now has a well-diversified capital market, with an equity market that has over 900 listed companies, a bond market that is the third largest in Asia, an Islamic capital market that is innovative and well-regarded globally, a derivatives market that leads in crude palm oil (CPO) price discovery and a unit trust industry that is one of the largest in the region. Governance strategies implemented during the previous master plans had ensured robust regulatory oversight to enhance confidence in the integrity of Malaysia’s capital market. The Malaysian capital market regulatory framework is benchmarked and ranks highly internationally with regard to, among others, investor protection standards, corporate governance and enforcement capabilities. The CMP3 will build on this solid foundation to pave the way for the next stage of Malaysia’s market evolution and growth. To achieve these desired outcomes, the CMP3 outlines six key development and regulatory thrusts that will collectively serve as pillars in developing strategic initiatives over the next five years. 

The first development thrust is facilitating fundraising for competitive businesses through a diverse market and intermediation ecosystem. The CMP3 also aims to empower all Malaysians to invest for their future and promote digital inclusion and protection for vulnerable investors. Furthermore, through the Sustainable and Responsible Investment (SRI) and Islamic Capital Market (ICM) pillars, the CMP3 aims to shape a stakeholder economy by mobilising more capital towards sustainable businesses. In tandem, the SC’s regulatory approach will also evolve in response to changing trends and the market landscape, with the CMP3 striving to embed greater shared accountability within the capital market, particularly corporate responsibility to stakeholders beyond short-term profitability. It also aims to achieve a more efficient regulatory outcome and greater efficiency in investor protection through swift, effective and targeted enforcement and supervision approaches. In addition, as the industry becomes more digital, the CMP3 envisions greater use of technology — both regulatory technology (RegTech) and supervisory technology (SupTech) — for greater efficiency and deeper insights. 

Bursa Malaysia aims to be carbon neutral by 2022 

According to Bursa Malaysia chairman Tan Sri Abdul Wahid Omar, Bursa Malaysia is targeting to become carbon neutral by 2022 and achieve net zero emissions by 2050 across its entire operations, in line with the global drive for decarbonisation. The stock exchange operator would systematically manage its carbon footprint across the exchange’s entire business activities, while reducing emissions in line with a net zero future. Bursa Malaysia will participate in global campaigns, “Business Ambition for 1.5°C” and “Race to Zero”, to support the transition to a climate resilient and inclusive economy. Climate change poses a significant threat to the planet and society. It is in everyone’s best interests to work towards a systemic change that prevents a climate catastrophe. He believes it is important for all companies regardless of size, industry and operating models to scale-up their climate contributions with firm commitments and concerted actions towards achieving a climate-resilient future. Climate change has always been a priority for Bursa Malaysia. 

Eye On The Markets 

This week, on Friday (24Sep), the Ringgit opened at 4.1770 against the USD from 4.1860 on Monday (20Sept). Meanwhile, the Ringgit was 3.0974 to the Sing Dollar on Friday (24Sep). On Monday (20Sept), the FBM KLCI opened at 1547.62. As at Friday (24Sep) 10:00am, the FBM KLCI is down 17.97 points for the week at 1529.65. Over in US, the overnight Dow Jones Industrial Average closed up 506.50 points (+1.48%) to 34,764.82 whilst the NASDAQ added 155.40 points (+1.04%) to 15,052.20.  

Malaysia’s approved FDI leaps 223% in 1H 2021 – MITI

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According to Senior Minister and Minister of International Trade and Industry (MITI) Datuk Seri Azmin Ali, an increase in approved foreign direct investment (FDI) in the first half of 2021 (1H’21), which leapt 223.1% year-on-year, signals the confidence of foreign investors in the country’s stable and conducive economic climate and business ecosystem. The positive performance augurs well for Malaysia’s path to a vibrant and sustainable economic recovery. The stellar performance also demonstrates that Malaysia’s strategy of positioning the country as an attractive investment destination of choice and a supply chain hub in ASEAN, particularly for manufacturing operations, is showing positive results. FDI was the main driver of the manufacturing sector during this period with a contribution of RM58.2bil in approved investments while domestic sources of investment came to RM8.7bil. In terms of total approved investment, Malaysia recorded RM107.5bil of FDI and domestic direct investments (DDI) in the manufacturing, services, and primary sectors, representing a jump of 69.8% compared with the same period of last year. The investments involved 2,110 projects and are expected to generate 44,994 jobs in the country. Malaysia continues to attract high-value and high-tech investments, bolstered by its high-skilled talent and adoption of advanced technology for value-added industries. 

Meanwhile, in tandem with the National Investment Aspirations (NIA), Malaysia pursues more capital-intensive projects and those that support the development agenda of the nation, consistent with environmental, social and governance (ESG) goals. There is an emphasis on jobs creation with the 367 manufacturing projects worth RM66.9bil approved in the first half of 2021 (1H’21) creating 32,220 job opportunities. The workforce required for the approved investments include 1,367 managerial positions and 4,031 technical professionals such as engineers in the field of E&E, mechanical, chemical, and other disciplines, reflecting the higher value chain transition of the manufacturing sector. In addition, the approved manufacturing projects will also require 4,144 skilled craftsmen. Notable projects approved in 1H’21 include South Korea’s SK Nexilis project for a new copper foil manufacturing plant; Risen Energy’s proposed project to produce bi-facial technology solar products, and OCIM’s proposed investment to expand the capacity of its solar grade polysilicon plant. Going forward, from the strategic vantage point of the NIA, MITI will continue to pursue high quality investments to bring value to the nation and people, not just in preserving jobs but in creating new high value-added employment. The ministry is committed towards positioning Malaysia as the ideal partner for investors in the region, and propelling long term growth for Malaysia through the flow of sustainable quality investments in new and complex growth areas. 

Bursa Malaysia to enhance investor relations capabilities of public-listed companies  

According to Bursa Malaysia chief executive officer Datuk Muhamad Umar Swift, the bourse has embarked on an investor relations and public relations incentive programme to enhance the visibility and accessibility of its public-listed companies (PLCs) to the investment community through more active investor relations engagements. PLCs participating in this pilot programme will undergo training for one year to enhance their in-house investor relations capabilities for more effective investor relations engagements. The scope of the investor relations and public relations programme includes, among others, assisting PLCs and their senior management with the preparation of corporate presentation slides and factsheets, planning and organising investor briefings with analysts and fund managers, and assisting with public relations engagements such as press releases and media interviews. It is important for PLCs to develop strong relationships with existing and potential shareholders, as well as effectively communicate their equity story and ambitions to all stakeholders. Doing so consistently, will assist investors in making informed investment decisions, which is a key component to companies’ success in the investment market. This programme will not only help PLCs recognise the value of investor relations, but also help to market and promote their attractiveness as a viable investment, potentially elevating their profile, valuations, and liquidity. The programme is the latest of Bursa Malaysia’s strategic focus on ecosystem enhancement, which aims to grow market vibrancy and liquidity while providing a conducive capital raising platform to its existing PLCs. As of September 1, two PLCs namely Ge-Shen Corporation and Excel Force MSC Bhd had conducted their investor relations briefings, which garnered huge interest and participation of over 130 attendees, comprising fund managers, analysts, and institutional investors. 

Eye On The Markets 

This week, on Friday (17Sep), the Ringgit opened at 4.1765 against the USD from 4.1425 on Monday (13Sept). Meanwhile, the Ringgit was 3.1023 to the Sing Dollar on Friday (17Sep). On Monday (13Sept), the FBM KLCI opened at 1573.78. As at Friday (17Sep) 10:00am, the FBM KLCI is down 24.47 points for the week at 1549.31. Over in US, the overnight Dow Jones Industrial Average closed down 63.07 points (-0.18%) to 34,751.32 whilst the NASDAQ added 20.40 points (+0.13%) to 15,181.90.  

11 Malaysian firms in Forbes Asia’s 200 Best Under A Billion list

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According to Forbes Asia, a total of 11 Malaysian firms were recognised under their 2021 Best Under A Billion list. The list highlights the resilience of 200 public-listed small and mid-sized companies in the Asia-Pacific region with sales under US$1bil (RM4.16bil). The Malaysian companies that made the list this year were Comfort Gloves Bhd, D&O Green Technologies Bhd, Dancomech Holdings Bhd, Dufu Technology Corp Bhd, FoundPac Group Bhd, Frontken Corp Bhd, Revenue Group Bhd, Scientex Bhd, Thong Guan Industries Bhd, UG Healthcare Corp Ltd and ViTrox Corp Bhd.  

The top-three performing Malaysian firms in terms of total sales were Scientex (US$834mil or RM3.47bil), Thong Guan Industries (US$229mil or RM952mil) and Comfort Gloves (US$225mil or RM936mil). In terms of total net income, the top-three performers were Scientex (US$92mil or RM383mil), Comfort Gloves (US$67mil or RM279mil) and ViTrox (US$25mil or RM104mil).  

Scientex manufactures and sells plastic products and also engages in property development. Thong Guan Industries is primarily involved in the manufacture of plastic packaging, while Comfort Gloves is engaged in the manufacture and trading of natural and synthetic specialty examination gloves. ViTrox specialises in designing and developing automated vision inspection systems and equipment testers for the semiconductor and electronic packaging industries, as well as electronic communications equipment. 

The sound financial figures of the 200 companies on the list reflected how well they coped in the midst of a global pandemic. No surprise, healthcare and pharmaceutical-related companies were standouts while tech and logistics firms linked to the global e-commerce boom also benefitted. The list was meant to identify companies with long-term sustainable performances across a variety of metrics. From a universe of 20,000 publicly traded companies in the Asia-Pacific region with an annual revenue above US$10mil (RM41.58mil) and below US$1bil (RM4.16bil), only these 200 companies were selected. The companies on the list, which were unranked, were selected based on a composite score that incorporated their overall track record in measures. These include debt, sales and earnings-per-share growth over both the most recent fiscal one and three-year periods, as well as the strongest one and five-year average returns on equity. Aside from the quantitative criteria, qualitative screens were used as well, such as excluding companies with serious governance issues, questionable accounting, environmental concerns, management issues or legal troubles. State-controlled and subsidiaries of larger companies were also excluded. The criteria also ensured a geographic diversity of companies from across the region. The list used full-year annual results, based on the latest publicly available figures as of Aug 12, 2021, compiled by FactSet. FactSet is a United States-based financial data and software company that provides integrated data and software. All other research was done by Forbes Asia. 

Relief measures delay recognition of problem loans – RAM 

According to RAM Ratings co-head of financial institution ratings Wong Yin Ching, in conjunction with the publication of the rating agency’s Banking Quarterly Roundup Q2’21, the emergence of bad loans in the banking system is expected to be delayed in view of the sizeable proportion of loans under relief. With the reintroduction of the six-month blanket loan repayment moratorium for all retail, microenterprise and affected SME borrowers, impaired loans will continue to be suppressed for the rest of the year and even in the first half of 2022 (H1’22). The latest regulatory support measure – on an opt-in basis but automatically approved – came into effect in July following a rise in infections and stricter lockdowns which resulted in major disruptions to business activity. Targeted relief programmes offered by banks were already available prior to this. Based on data obtained during the recent bank results briefings, the average proportion of domestic loans under relief or restructuring and rescheduling programmes doubled to about 26% (ranging from 22% to 32% for individual banks) from the previous quarter for eight selected banking groups. This figure may creep up in the coming months although it understands the number of applications has already slowed in recent weeks. Not all relief loans will turn problematic as some borrowers took the payment holiday as a precaution. This is evident from the high percentage of relief loans with no arrears or held by the T20 income group, as shared by some banks. The system’s underlying asset quality however will only become clearer after forbearance measures are phased out, with bad loans likely to peak in late 2022 or early 2023. As at end-July 2021, the banking industry’s gross impaired loan ratio stood at a still-low 1.67%. All eight banks posted a higher year-on-year pre-tax profit in Q2’21, largely due to a low base effect, but performance was mixed on a quarter-on-quarter (q-o-q) basis. Results for the previous corresponding period were marred by a sharp squeeze in net interest margins (NIMs) because of substantial modification charges arising from the first loan moratorium and multiple policy rate cuts. NIMs have since staged a strong recovery (Q2’21: 2.33%; Q2’20: 1.83%), but the q-o-q improvement was modest (+2bps) as most deposits had already been repriced lower by Q1’21. The system’s NIM is envisaged to hover at the current level in the coming quarters and may even see slight compression. Banks are expected to book some modification losses in Q3’21 on account of the recent moratorium, but the quantum will be significantly lower than last year’s. In Q2’21, the average credit cost ratio (annualised) of the eight banks moderated q-o-q to 52bps from 61bps. RAM is maintaining its full-year projection of 60-70bps (2020: 84 bps) it is foreseen that banks will continue or step up efforts to build up provision reserves as the protracted lockdown has dampened nascent economic recovery. Despite heightened uncertainties, profit performance for the full year is expected to be better than previous year’s, driven by NIM recovery and to a lesser extent, lower provisioning charges. 

Eye On The Markets 

This week, on Friday (10Sep), the Ringgit opened at 4.1475 against the USD from 4.1440 on Monday (6Sept). Meanwhile, the Ringgit was 3.0886 to the Sing Dollar on Friday (10Sep). On Monday (6Sept), the FBM KLCI opened at 1590.67. As at Friday (10Sep) 10:00am, the FBM KLCI is down 11.87 points for the week at 1578.80. Over in US, the overnight Dow Jones Industrial Average closed down 151.69 points (-0.43%) to 34,879.38 whilst the NASDAQ shed 38.40 points (-0.25%) to 15,248.30.  

Budget 2022 to rebuild economic resilience and spur recovery

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According to the Finance Ministry, in its inaugural pre-budget statement (PBS), the upcoming Budget 2022 will focus on protecting and driving the recovery of lives and livelihoods of Malaysians, rebuilding resilience of the economy, and catalysing socio-economic reforms. Budget 2022 will prioritise continuing programmes to support and spur economic recovery in line with the gradual reopening of the economic sectors through the National Recovery Plan. It will also address potential lingering and longer-term effects of the pandemic on public health and economic structure. Another theme of Budget 2022 will be to ensure the continuity in policy and assistance provided to the people and businesses. It will also focus on efforts to help the vulnerable and disadvantaged segments of society, women, indigenous people and the disabled to ensure no one is left behind in the nation’s developmental and recovery agenda. Efforts to protect and generate new job opportunities will continue to be a priority. Budget 2022 will catalyse structural reforms in the post-pandemic period to boost the nation’s competitiveness, apart from ensuring greater sustainability and inclusiveness in its development agenda. 

Beginning this year, the PBS will be published ahead of the tabling of the budget to increase transparency in annual budget preparation, a move which is in line with the proposed framework in enacting the Fiscal Responsibility Act, which aims to improve the governance, transparency, and accountability of the country’s fiscal management. This effort will enhance Malaysia’s position in the Open Budget Index, an international report published by the International Budget Partnership (IBP). Based on the IBP report for 2019, Malaysia recorded a relatively low score of 47 for budget transparency compared to regional countries such as the Philippines (76), Indonesia (70) and Thailand (61). This Budget also serves as a catalyst towards the implementation of the 12th Malaysia Plan (12MP) that will drive economic growth, inclusiveness, and sustainability in the medium term, based on the Sustainable Development Goals and the Shared Prosperity Vision (SPV) 2030. The government is also considering measures to increase tax revenue through increased tax compliance. Among the measures under consideration are :- the implementation of the Special Voluntary Disclosure Programme for indirect taxes administered by the Royal Malaysian Customs Department; the introduction of a Tax Compliance Certificate as a pre-condition for tenderers to participate in government procurement; the implementation of the Tax Identification Number as well as reviewing tax treatment that is identified as having elements of revenue leakage or harmful practices. 

ASNB launches ASN Equity Global for investors with high risk tolerance 

Amanah Saham Nasional Bhd (ASNB), the wholly-owned unit trust management company of Permodalan Nasional Bhd (PNB), today introduced ASN Equity Global (ASNEG), the first ASNB fund to focus entirely on global equities, which will be available for subscription from September 1, 2021 onwards. ASNEG primarily caters to investors with high risk tolerance as the fund employs a capital growth investment strategy that involves a big degree of exposure to international markets. True to its name, the fund will heavily focus on global public equities with an asset allocation of up to 99 per cent as it adopts a strategy of investing in high quality international companies with strong growth prospects and companies that will benefit from global megatrends. According to PNB group chairman Tun Arifin Zakaria, the introduction of ASN Equity Global marks another major milestone for PNB and ASNB as the fund management companies continue to fulfil their mandate to all Malaysians by providing easy access to global markets at an affordable entry point. The comprehensive range of unit trust products now cuts across multiple geographies and fund categories, comprising conservative, balanced, and growth funds, allowing unit holders to fulfil their financial and investment goals. ASN Equity Global is managed by PNB’s team of professional fund managers based in Kuala Lumpur as well as its London office, to capture and capitalise on opportunities in more than 50 major global stock markets. The minimum initial investment is only RM10.00 and additional investment from as low as RM1.00. Starting from September 1, 2021, investors can subscribe to ASN Equity Global at the initial offer price of RM1.00 per unit until September 21, 2021 on all channels, including and myASNB mobile app, ASNB branches and agents nationwide, as well as ASNB agents’ internet banking facilities. Between September 1 and December 31, 2021, ASNB is offering a lower sales charge rate for all over-the-counter subscriptions. 

Eye On The Markets 

This week, on Friday (3 Sep), the Ringgit opened at 4.1510 against the USD from 4.1770 on Monday (30Aug). Meanwhile, the Ringgit was 3.0935 to the Sing Dollar on Friday (3 Sep). On Monday (30Aug), the FBM KLCI opened at 1593.19. As at Friday (3 Sep) 10:00am, the FBM KLCI is down 12.22 points for the week at 1580.97. Over in US, the overnight Dow Jones Industrial Average closed up 131.29 points (+0.37%) to 35,443.82 whilst the NASDAQ added 21.80 points (+0.14%) to 15,331.20.