Govt cuts stamp duty for share trading and expedites IPO process to revive market

Inve$t | Market Sentiments | 23 June 2023 

According to Prime Minister Datuk Seri Anwar Ibrahim, the government will reduce the stamp duty for shares traded on Bursa Malaysia, lowering it to 0.10% from 0.15% of contract value, subject to a maximum cap of RM1,000 per contract, effective July 2023. He announced it at the launch of Capital Market Talent programme for graduates on June 19. 

PM Anwar said reducing the stamp duty for shares traded on Bursa Malaysia will directly reduce the cost of securities transactions and make the Malaysian stock market more competitive. This step will stimulate the market and enhance its attractiveness. The increase in market liquidity will attract more domestic and foreign funds into the Malaysian stock market, thereby encouraging SMEs to pursue IPOs and facilitating public-listed companies in raising funds to expand their businesses and create more job opportunities. 

To encourage more companies to be listed on Bursa Malaysia, the Securities Commission and Bursa Malaysia will implement reforms this year to expedite the IPO process and reduce time-to-market to ensure Malaysia’s competitiveness and attractiveness is sustained. Additionally, to attract a larger pool of investors to support financing for SMEs and the new economy, the Ministry of Finance (MOF) and SC will look at policies to facilitate and attract the setting up of family offices in Malaysia. Both MOF and SC will also work to promote corporate venturing to drive greater domestic direct investment through more facilitative tax and incentive policies and widen the definition of sophisticated investors including angel investors. 

The PM added that any reform requires discipline and patience. It also requires confidence and courage to do new things and make difficult decisions for the benefit of the people and the nation. 
Despite the multiple challenges inherited by the government, early economic indicators show that the government’s fiscal policies and Budget 2023 measures are bearing fruit, such as Malaysia’s strong growth of 5.6% in the first quarter of 2023 and reduced unemployment rate of 3.5%. The affirmation of credit rating by Fitch and Moody’s earlier this year also reflect their confidence in the government’s determination to sustain economic growth momentum. 
This government will do all that is needed to drive inclusive and sustainable growth, an open economy that respects free financial flow. To further promote domestic growth, the Cabinet will accelerate the implementation of government projects and facilitate approvals for businesses such as applications for skilled expatriates. 

Capital market plays pivotal role in supporting sustainability-related investment – SC 

According to Securities Commission Malaysia (SC) chairman Datuk Seri Awang Adek Hussin, the capital market can play a pivotal role by facilitating funding access to support the growth of sustainability-related investment products. One of SC’s key priorities is ensuring that the capital market is able to channel funds, as well as capital, towards meeting sustainability targets. 

To do so, investors and lenders will require more transparent, comparable and reliable information from companies on their sustainability journey. These data and information will allow investors to better price such risks and opportunities. He was speaking in his opening address at the Sustainable and Responsible Investment (SRI) Virtual Conference 2023 on Wednesday (June 21). 

The International Sustainability Standards Board (ISSB) is developing a global baseline standard for sustainability disclosures, which is expected to be completed this month. Given the complexity and different levels of market maturity in terms of sustainability practices and reporting, it is expected that jurisdictions will be given some flexibility to set their own timeline for adoption of these disclosure standards. 

From the emerging market’s perspective, Malaysian PLCs should be ahead of the curve, given their head-start in sustainability reporting since 2015, as Bursa’s sustainability reporting requirements are also in line with the ISSB standards. He urged companies that have yet to meet the information needs of stakeholders to take immediate steps to do it. The SC and Bursa will provide companies with the required support, including capacity building programmes. 

Eye On The Markets 

On Thursday (22June), the Ringgit closed at 4.6510 against the USD and 3.4671 to the Sing Dollar. On Monday (19June), the FBM KLCI opened at 1383.89. As at Friday (23June) 9:00am, the FBM KLCI is up 11.81 points for the week at 1395.70. Over in US, the overnight Dow Jones Industrial Average closed down 4.81 points (-0.01%) to 33,946.71 whilst the NASDAQ gained 128.41 points (+0.95%) to 13,630.61. 

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