Support for new ESG Index in Malaysia

November 6, 2013 Leave a comment

Updated: Wednesday November 6, 2013 MYT 8:03:17 AM

Support for new ESG Index

BY WONG WEI-SHEN

PETALING JAYA: Socially responsible investing in Malaysia is set to ge t a shot in the arm following the announcement that Valuecap Sdn Bhd will be investing RM1bil into companies that meet the stipulated criteria. Valuecap, a fund set up by the Government in 2002 to invest in undervalued stocks in the local bourse, is bullish about the prospects of such investments.According to proposals in Budget 2014, Valuecap would be investing the amo unt in companies on the Environmental, Social and Governance (ESG) Index.
Commenting on this, a Valuecap official told StarBiz: “It will enable Valuecap to derive further value from investing in listed companies that demonstrate good sustainability practices, in particular companies which will be constituents of the ESG Index to be created”.
T here has been much interest recently by funds and individual inve stors in companies that are ethically and environmentally sound.
In October, Norway’s sovereign wealth fund blacklisted five companies, two of which are Malaysian timber compa nies – Sarawak’s WTK Holdings Bhd and Ta Ann Holdings Bhd – for allegedly being involved in environmentally damaging acti vities.
Nestle Mal aysia is one of a handful of local firms, which have been  selected to be part of the 2013 DowJones Sustainability Emerging Markets Index, which focuses on leading sustainable-driven companies in emerging markets.
The global market for ESG assets have been estimated at between US$1 3 trillion and US$14 trillion as of end-2012.
Recently, Bernama reported that Norway’s  ambassador to Malaysia Hans Ola Urstad expressed interest in investing in social responsible Malaysian companies with zero tolerance for corruption.
To-date the Norwegian Pension Fund has invested some RM5bil in about 80 companies in the country in various sectors including green technology-based firms.
However, the ESG Index is still at the nascent stage in the country.
According to Valuecap, whose shareholders are Khazanah Nasional Bhd,Permodalan Nasional Bhd and Kumpulan Wang Persaraan, a local index for such stocks has yet to be established.
“The ESG Index has yet to be created. The relevant supportive framework and appropriate mechanism to be put in place in the months ahead will facilitate benchmarking for sustainable investing practices among listed companies in the domestic marke ts,” it said. But, the initiative to create an ESG Index
could not come at a better time, said the company.
Participating in the growing ESG investment segment would position Malaysia as a capital market for socially responsible investments.
The Government’s initiative comes with its commitment to drive Malaysia’s  sustainable growth agenda within the corporate sector.

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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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