KUALA
LUMPUR: The establishment of Asean
Trading Link by Asean exchanges this month will be a catalyst for further fund
inflows into South-East Asia and increase the region’s attractiveness as a
bigger capital market bloc, rivalling more established and bigger ones in Hong
Kong, China and India.
For a
start, the Asean Trading Link, to be launched in the middle of this month, will
connect the stock exchanges of Malaysia and Singapore, with Thailand to be
connected in August. Future partners include Indonesia, the Phillipines and
Vietnam.
“The
Asean Trading Link enables the capital markets here to have a common trading
platform. This will galvanise forces of the individual markets in South-East
Asian to be a more significant sizeable player on the global stage,” MIDF Amanah Asset Management Bhd chief executive
officer and chief investment officer Scott Lim told StarBiz.
“The
Asean Trading Link set-up is timely and will be a catalyst for further fund
inflows because people from outside will now begin to see the markets in the
region as a formidable bloc and Asean Exchanges will be able to compete with
bigger markets in the wider Asian Pacific region such as China,” he said.
The
Asean Trading Link will initially connect the three stock exchanges of
Malaysia, Singapore and Thailand at the end of this year and will comprise more
than 2,200 companies with a combined market capitalisation of RM4.45 trillion.
The
Asean Exchanges, when fully set up, would comprise seven stock exchanges from
six different countries with an estimated 3,600 companies and a combined
population of 529 million. The market capitalisation of the combined exchanges,
at RM6.36 trillion, will be bigger than India’s economy.
Lim
said Asean Exchanges could be likened to what the European Union did with the
establishment of the common currency with the aim of combining economic forces
of several countries to be a more significant player on the global stage.
However,
he said Asean was nowhere near the stage for a monetary union
Interpacific
Securities research head Pong Teng Siew said the benefits of the link included
reduced transation costs, with brokerages now having direct access into other
markets without having to go through another intermediary.
“This
will allow for more seemless trading as brokers and market participants will
now be able to access live prices on the Asean Trading Link,” Pong said.
DANIEL
KHOO
The
Star Online
Business & Investment Opportunities
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