Companies listed on the FTSE Bursa Malaysia KLCI Index now generate 45% of their revenue from overseas; the top 10% of firms in the Malaysian equity market capturing an average of 82% of the capital raised over the last five years

June 14, 2013 Leave a comment

Friday June 14, 2013

PM urges EPF, other GLCs to step up involvement in smaller companies

By RAZAK AHMAD
razak@thestar.com.my

KUALA LUMPUR: The Employees Provident Fund (EPF) and other Government-linked investment companies should step up their involvement particularly in high quality mid-cap stocks, said Datuk Seri Najib Tun Razak.

The Prime Minister said the fund management industry, including public sector funds, should set specific objectives to increase the velocity of trades in the shares of such companies.“It is time for government-linked investment companies, especially the EPF, to step up and play a more prominent role, increasing market vibrancy particularly in good quality mid-cap stocks.

“Their participation would provide another avenue for companies to access primary and secondary funding to bring their businesses to the next stage of development,” Najib said in his keynote address at the 2013 Invest Malaysia conference.

Najib said the fund management industry was a major mobiliser of capital, with Malaysia’s collective savings pool currently in excess of RM1 trillion.

Smaller companies, however, found access to financing a challenge, with the top 10% of firms in the Malaysian equity market capturing an average of 82% of the capital raised over the last five years.

Najib said efforts to make the capital market more inclusive were underway to ensure better access by start-ups, aspiring entrepreneurs and small to medium-sized companies.

So far, they include the introduction of alternative financing structures such as business trusts as well as the upcoming “myULM”, an online platform for unlisted securities and alternative investment products that will be rolled out next year.

On the country’s investment outlook, the Prime Minister said there were indications that interest in Malaysia would be sustained, with foreign participation in Bursa Malaysia topping US$1bil (RM3.14bil) for the first time this year.

In addition, companies listed on the FTSE Bursa Malaysia KLCI Index now generate 45% of their revenue from overseas.

Invest in mid-cap stocks, GLICs urged

ZAIDI ISHAM ISMAIL

Published: 2013/06/14

GREAT MOBILISER OF CAPITAL: Move will increase overall market vibrancy, says prime minister

PRIME Minister Datuk Seri Najib Razak wants government-linked investment companies (GLICs), especially the Employees Provident Fund (EPF), to play a more prominent role and increase market vibrancy by investing in good quality mid-cap stocks.

He said Malaysia possesses a collective savings pool in excess of RM1 trillion and the fund management industry, including public sector funds, is a great mobiliser of capital.

“It is time for EPF to step up and play a prominent role as this will increase the velocity of shares traded and make a significant contribution to the overall market vibrancy.

“Their (GLICs) participation will provide another avenue for companies to access primary and secondary funding and bring their businesses to the next stage of development,” Najib said in his keynote address at Invest Malaysia 2013 here yesterday.

Mid-cap stocks are companies with medium-market capitalisation listed on Bursa Malaysia.

Meanwhile, speaking on the sidelines of the same conference later, EPF chief executive officer Datuk Shahril Ridza Ridzuan said the fund will continue to invest in mid-cap companies that meet its investment criteria.

He said 20 to 30 per cent of EPF’s current stock investment is in mid-cap companies.

“We have already invested in a lot of middle-sized companies. We will definitely support companies that fulfil our investment criteria.

“The criteria are profitability, liquidity of the stock itself and ability to generate cash flow and dividends. We need to be very careful with our investment as we need to return dividends to our members,” he said.

Shahril Ridza also confirmed that EPF is in talks with UDA Holdings Bhd to jointly redevelop the 34-year-old Bukit Bintang Plaza (BB Plaza).

The shopping mall will be demolished to make way for a redevelopment project, including a MY Rapid Transit station underneath the plot.

“Yes. UDA is holding talks with several parties and we are one of them. There have been some discussions.

“If the project fits into our property development criteria, then we look forward to undertaking it,” he added.

Besides EPF, UDA is reportedly also in negotiations with Kumpulan Wang Persaraan, Permodalan Nasional Bhd and Malaysian Resources Corporation Bhd.

The cost of the redevelopment project is estimated at between RM700 million and RM800 million.

Filed under Macro Trends

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Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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