Bursa Malaysia Bhd, the nation’s exchange
operator, plans to allow individual investors to start trading bonds on the
bourse in the third-quarter (3Q) to boost liquidity in the market as it widens
its product offerings.
Bursa
and the Securities Commission have agreed in principle to start such an
offering and are at the final preparation stage, chief executive officer (CEO)
Datuk Tajuddin Atan said in an interview in Kuala Lumpur yesterday.
This
will begin with government-guaranteed or investment-grade bonds, he said.
“These
are exchange-traded bonds in a form that allows retail investors to come in,”
Tajuddin said. “There are different types of investors who want to have the
opportunity to switch from equity to interest-rate exposure or having both.”
Malaysia
is seeking to follow neighbouring Thailand, Indonesia and the Philippines where
governments or companies already sell bonds in small lots for individual s to
buy through agents, such as banks or brokerages.
The
move will help boost volume and liquidity in Malaysia’s debt market, which
currently allows only over-the-counter transactions involving largely
institutional investors.
Bursa
on May 4 distributed consultative papers to the public seeking feedback,
Tajuddin said.
Final
preparation involves setting up the system and trading rules including the
products and issuers, he said.
“If we
can get this out within the 3Q, we are comfortable.” Malaysia, South-East
Asia’s third-largest economy, is part of the Asean Exchanges, a venture linking
seven regional bourses scheduled to begin next month. The project is aimed at
developing cross-border equities trading links to trim costs and foster
investment.
Malaysia
and Singapore will connect first, followed by Thailand in August, it said.
Vietnam’s two exchanges and the bourses in Indonesia and the Philippines are
also part of the project.
It may
take three to four years for all to be linked up, Tajuddin said. “It’s an Asean
asset class that will allow investors, retail or institutional, to be able to
capitalise on the growth prospect of each of these countries,” he said.
The
combined market capitalisation of the bourses involved in the project is US$1.8
trillion, according to data compiled by Bloomberg. The first three participants
account for US$1.2 trillion (RM3.78 trillion), the data showed.
Asean’s
member states are Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the
Philippines, Singapore, Thailand and Vietnam.
Bloomberg
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