Thursday, October 28, 2010

Bursa left behind

CEO says SGX-ASX merger, if successful, will also benefit Malaysia

PETALING JAYA: Bursa Malaysia Bhd, the local exchange operator, would need to step up its game plan, or risk falling behind as its rival down south gets aggressive.

“The business of running an exchange is all about the volume game,’’ said a local fund manager, who declined to be named. “A bigger, more diverse bourse would definitely attract more listings and trading volume.’’

Bursa Malaysia had been struggling to attract more foreign investors to buy local stocks, and despite a recent surge in interest had remained a laggard compared to bourses like those in Indonesia and Thailand.

Earlier this year, Bursa Malaysia said plans were in place to allow cross-border stock trading for Asean investors from their home countries, although they were only expected to happen next year at the earliest.

The Asean region is home to a number of top performing bourses this year, but the industry is fragmented because of different country-based regulatory regimes and trading platforms.

The Singapore Exchange’s (SGX) US$8.3bil bid for the Australian Stock Exchange (ASX), if it goes through, would be the region’s first cross-border merger of bourses.

The deal, however, had drawn considerable political opposition in Austrialia, highlighting the challenges of consolidating the industry in the region.

Bursa Malaysia chief executive officer Datuk Yusli Mohamed Yusoff said the merger deal, if it happened, would draw greater attention to bourses in the region.

“I’ve mentioned before that any regional efforts by other players that will increase interest of investors to the Asian markets can be looked upon as an opportunity for other exchanges in the region to benefit from,’’ he said in an email yesterday to StarBiz.

“On Bursa’s end, we will continue our efforts to build and promote the strengths of our market, especially in Islamic finance, as well as commodities,’’ he added.

Press reports said the combined entity of SGX and ASX would house the region’s biggest market for real estate investment trusts, exchange traded funds and most derivatives products.

It would create the world’s fifth largest market operator by market value.

“The world exchanges are rapidly changing,’’ SGX’s chief Magnus Bocker said on Oct 25. The acquisition would make us a stronger player, he said.

Bursa Malaysia had witnessed a revival of foreign interest in the past couple of months as waves of liquditity made their way into regional markets.

CIMB Research in a report dated Oct 26 said the net inflow of foreign funds into Malaysia reached US$129mil in September, citing data from fund tracker Emerging Portfolio Fund Research.

“This brings year-to-date inflows to US$186mil, beating last year’s total of US$158mil,’’ it said.

The benchmark FTSE Bursa Malaysia KL Composite Index had risen 17.8% year-to-date, less than half the gains recorded by main indices in Indonesia, Thailand and the Philippines.

Yusli said yesterday that Bursa was “always open” to exploring potential collaborative initiatives with strategic benefits to grow its business.

Bursa had partnered with the biggest derivatives exchange in the world, the Chicago Mercantile Exchange, to grow its derivatives market. It had also in the past worked with other exchanges such as the Korean Exchange and NYSE Euronext on technology collaborations.

Taken from : The Star

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