Malaysia champions new focus of stock exchange

IPO Pipeline

Malaysia’s stock market was valued at $440.5 billion on Feb. 18, making it Asia’s 10th biggest, according to data compiled by Bloomberg. Bursa Malaysia, with a market capitalization of $1.1 billion, is the second-biggest publicly traded bourse in Southeast Asia after Singapore, the data show.

The value of capital raised on the Malaysian exchange may be “slightly less than last year,” Tajuddin said.

A total of 28.8 billion ringgit was raised from IPOs and secondary sales in 2012, data compiled by Bloomberg show.

Initial sales have raised 386 million ringgit this year through Feb. 19, the data show. Malakoff Corp., a power producer, AirAsia X Bhd., a long-haul budget airline, and port operator Westports Malaysia Sdn. are among companies planning to list in Kuala Lumpur this year.

The market “needs to grow in size,” Tajuddin said. “I am hoping that some of our hidden gems will be looked at in the same breath as some of the bigger or more renowned names.”

Trading Link

Bursa Malaysia, Singapore Exchange Ltd. and the Stock Exchange of Thailand have led the formation of the Asean Trading Link, a platform offering cross-border stock transactions in Southeast Asia. Singapore and Malaysia were the first to connect on Sept. 18, with Thailand joining the link on Oct. 15.

Indonesia will connect to the Asean link by 2015, Ito Warsito, the president of the nation’s stock exchange, said on Oct. 15. Hanoi Stock Exchange Chief Executive Officer Tran Van Dung said the same day he expects Vietnam’s two exchanges to join within two years. The Philippine bourse may join in two-to- three years, CEO Hans Sicat said on Dec. 6.

The trading link is a “combined collaborative group” that seeks to promote an Asean asset class, with trading volumes expected to improve in one-to-two years, Tajuddin said. He didn’t provide current trading volume figures.

“I would expect a little bit more flow, especially from the top 30 companies to be traded more rapidly,” he said. “With the commitment from all the exchange heads in this region, most probably we could have a certain substantial amount of trade flow coming from that.”

Palm Oil

Malaysia’s crude palm-oil futures contract is used as the Southeast Asian benchmark for prices. Daily open interest for all products, including palm oil, reached a record on Dec. 31, according to a Jan. 16 statement on Bursa Malaysia’s website. Total derivatives volume grew 14 percent in 2012, according to the statement.

Bursa Malaysia Derivatives Bhd., formerly known as Malaysia Derivatives Exchange Bhd., is 75 percent owned by Bursa Malaysia. The remainder is owned by the Chicago Mercantile Exchange.

The exchange operator is considering a partnership with Nasdaq OMX Group Inc. in improving its trading engine. “We hope we can actually work in that partnership in the same breath as CME to start moving, regionalizing or internationalizing Bursa Malaysia,” Tajuddin said, without giving details.

Bloomberg News

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