Inve$t | Market Sentiments | 8 September 2023
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The Securities Commission Malaysia (SC) today issued the revised Guidelines on Market Conduct and Business Practices for Stockbroking Companies and Licensed Representatives (SBC Guidelines). The revised guidelines, which take effect on Thursday September 9, 2023, outline the requirements that would allow stockbroking companies to offer fractional share trading services for shares listed on Bursa Malaysia. A fractional share is a portion of a stock that is less than one standard board lot.
Trading of fractional shares was one of the capital market initiatives announced by YAB Prime Minister Dato’ Seri Anwar bin Ibrahim earlier in June this year to make share trading on Bursa Malaysia more accessible, affordable and inclusive for the retail investors, particularly the young investors. The revised guidelines reflect the SC’s continued commitment to enhance market vibrancy and promote greater retail participation in the Malaysian stock market.
According to SC Chairman Dato’ Seri Dr. Awang Adek Hussin, he said that allowing retail investors to trade in fractional shares, individuals particularly the younger generation, will now have increased affordability and flexibility to trade and invest in the more expensive blue-chip stocks, at a fraction of the standard board lot value. In addition, the introduction of fractional share trading would allow retail investors to diversify their portfolio, whilst creating a more inclusive capital market for all Malaysians.
He added that to support the orderly development of the capital market, it is important for stockbroking companies to have the necessary controls and systems to safeguard the interest of the investors. Among the key requirements under the guidelines is the need for stockbroking companies to implement adequate systems, policies, and procedures. This is to ensure fair treatment of customers’ orders, price transparency, and proper supervision of the fractional share trading service. The updated SBC Guidelines is available here.
Overnight Policy Rate (OPR) maintained at 3% – BNM
At its meeting today, the Monetary Policy Committee (MPC) of Bank Negara Malaysia (BNM) decided to maintain the Overnight Policy Rate (OPR) at 3.00 percent. The global economy continues to expand, driven by resilient domestic demand supported by strong labour market conditions.
Global growth, however, remains weighed down by persistently elevated core inflation and higher interest rates. Global trade is also affected by rotation of spending from goods to services, and the ongoing electrical and electronics (E&E) downcycle. The slower-than-expected growth in China also weighed on the global economy.
Globally, headline inflation continued to moderate. While core inflation in advanced economies is slowing down, it remains above historical averages. For most central banks, the monetary policy stance is likely to remain tight. The growth outlook remains subject to downside risks, mainly from a slower momentum in major economies, higher-than-anticipated inflation outturns, an escalation of geopolitical tensions, and a sharp tightening in financial market conditions.
In the second quarter of the year, growth of the Malaysian economy was affected by slower external demand and a decline in commodity production. Moving forward, growth will continue to be driven by resilient domestic expenditure amid the challenging external environment. Continued employment and wage growth, particularly in the domestic-oriented sectors, remain supportive of household spending. Tourist arrivals and spending are expected to improve further.
Investment activity would be supported by continued progress of multi-year infrastructure projects, and implementation of catalytic initiatives under the recently announced national master plans. Domestic financial conditions also remain conducive to financial intermediation amid sustained credit growth. These factors will continue to underpin the growth momentum going into 2024. While the growth outlook is subject to downside risks stemming from weaker-than-expected external demand and larger and protracted declines in commodity production, upside risks mainly emanate from stronger-than-expected tourism activity, a stronger recovery from the E&E downcycle, and faster implementation of existing and new projects.
In line with expectations, headline and core inflation have continued to ease amid the more moderate cost conditions. This moderating trend would likely continue in 2H2023, partly reflecting the higher base from 2H2022 and continued easing momentum of price increases. Risks to the inflation outlook remain highly subject to changes to domestic policy on subsidies and price controls, global commodity prices and financial market developments, as well as the degree of persistence in core inflation.
At the current OPR level, the monetary policy stance remains supportive of the economy and is consistent with the current assessment of the inflation and growth prospects. The MPC remains vigilant to ongoing developments to inform the assessment on the outlook of domestic inflation and growth. The MPC will ensure that the monetary policy stance remains conducive to sustainable economic growth amid price stability.
Domestic interests to be protected in all govt policies including NIMP 2030 – Zafrul
According to minister Tengku Datuk Seri Zafrul Abdul Aziz, the Ministry of Investment, Trade and Industry (Miti) will safeguard domestic interests in all policies, including the New Industrial Master Plan 2030 (NIMP 2030). Despite the implementation of the policy of liberalisation, domestic direct investments (DDI) have continued to dominate in terms of approved investments.
In response to concerns that foreign capital would dominate in local equity holdings as a result of the NIMP 2030, he said that in the 10-year period from 2012 to 2021, approved DDI amounted to RM1.3 trillion, or 64% of the total investments approved. He explained that the liberalisation of the manufacturing sector began as far back as June 17, 2003, when 100% foreign ownership in new manufacturing companies were permitted under the Second Industrial Master Plan (IMP 2). In other words, the liberalisation was not created by NIMP 2030; the policy of liberalisation has existed since IMP 2.
With regards to concerns over economic liberalisation given to Tesla, he said Tesla’s entry into Malaysia is via the Battery Electric Vehicle Global Leaders Initiative (BEV GLI) programme, which is designed to attract exclusive electric vehicle (EV) makers to invest here. Tesla’s presence will foster the confidence of other original equipment manufacturers to make Malaysia into their regional hub for EV technology. This will have a positive spillover effect on the national economy. We have already seen the entry of Tesla accelerating the transition to EVs in China, Hong Kong and Norway. When this happens, many local small and medium enterprises (SMEs) would benefit from participating in the EV ecosystem.
Elaborating further, he said that Tesla’s presence in Malaysia is not just about selling cars. Many conditions have been imposed on it. The company is required to instal a large number of DC (direct current) fast chargers, many of which can also be used by other marques besides Tesla. It also must employ and train locals, with at least 80% of the company’s workforce being Malaysians. Tesla is also required to collaborate with at least 10 higher education, or technical and vocational education and training (TVET) centres, for knowledge transfer. Furthermore, the company must work with at least 10 local companies and use local contractors for the local charging network, to ensure that Malaysia benefits widely from its presence.
Tengku Zafrul explained that the NIMP 2030 targets to raise the manufacturing sector’s value to almost RM588 billion by 2030, to create 600,000 job opportunities, and increase the median salary for the sector to at least RM4,510 per month. He concluded by asking if such a strategy is not progressive for Malaysia, what then is progressive?