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| MIDF Research: Greater investability in capital markets with new measures |
| Written by Surin Murugiah | |||
| Wednesday, 01 July 2009 11:16 | |||
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However, notwithstanding the deregulation, the national interest in terms of strategic sectors will continue to be safeguarded through sector regulators, it said in a research note on July 1. "Specifically equity conditions will remain in regulated sectors involving the Energy Commission, Commercial Vehicles Licensing Board, National Water Services Commission, Malaysian Communications and Multimedia Commission." "In sector such as telecommunication, the foreign shareholding limit will therefore remain capped at 49%. Currently, Digi is 49%- owned by Telenor SA of Norway, while TM and Axiata have foreign shareholdings of less than 5% respectively," it said. MISD Research said the repeal of the FIC guideline may create more M&A interests in certain sectors, most notably the oil and gas sector. It said companies in the sector are currently trading at discounted valuation, vis-a-vis the rich valuation that they attracted before the global financial crisis. It will be an opportunity for foreign oil and gas players to fast track the localisation of their operations. In the property sector, there will be an opportunity for foreign players to create a landbank in Malaysia, subject to the dilution consideration as announced, it said. On the treatment of fund raising by listed companies, MIDF Research said the measures announced effectively reduced Bumiputera's equity requirement from 30% to a minimum of 12.5%. More importantly, by ensuring that the general bumiputera public is included in any fund raising exercise, it enhances transparency with regard to the distribution at the primary level, it said. "The removal of equity conditions post-IPO will overcome the current practice of bumi shares being placed to a nominee instead of bona fide bumiputera shareholder. "Nevertheless, the equity market may be disappointed that the bumi equity requirement is not completely liberalized, " it said. On the easing of rules relating to property acquisitions, MIDF Research said this was an effort aimed at rejuvenating the local property market. It said that with less red tape, the move might revive interests in Malaysian property and support the less established property developers. "It will encourage more corporations (MNCs and foreign) to operate/make Malaysia as their hub; lure foreign investments to invest in our economic zones namely Iskandar Malaysia, ECER, SCORE, NCER; spur property sales and support Malaysia My Second home program," it said. On the liberalization of the fund management, unit trust and stockbroking industries, MIDF Research said the ownership liberalisation came after the award of 5 new conventional and three new Islamic licences to foreign fund managers. It said that as far as opening up the market to foreign players, the announcement made little difference. However, this would be an opportunity for shareholders to "cash out" to foreign parties, it said. "The fund management industry is already overcrowded. In addition to the Islamic Fund management licences given to foreign players, the government had also given licences to five local-based players, namely Kuwait Finance House (Malaysia), DBS Asset Management, CIMB Principal Asset Management, Global Investment House, Reliance Asset Management." "It therefore does not make sense for new licences to be given to foreign players. The same applies to the unit trust and stockbroking industries. In the stockbroking industry, five licences have already been given to Credit Suisse, Macquarie Group, JP Morgan, CLSA and Nomura Holdings," it said. MIDF Research said a possible scenario arising from the liberalisation of the ownership structure in stockbroking would be the non-IB brokers becoming M&A targets. Standalone non-IB brokers such as JF Apex and AA Anthony may attract foreign suitors looking for easy entry to be a player in the Malaysian capital market, it said. On the establishment of Ekuinas (Ekuiti Nasional Berhad), MIDF Research said it expects Ekuinas to be self-funded much like PNB, where higher risk-profile investors would be allowed to participate. "Ekuinas would be a boost to the capital market by allowing companies to unlock the values of the unlisted assets," it said.
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