Business

Monday January 5, 2009

Bursa to lift Malaysia’s profile


Bursa Malaysia Bhd chief executive officer Datuk Yusli Mohamed Yusoff says Bursa will continue to channel its efforts to build Malaysia as an Islamic capital market hub in Asia and boost the country’s profile as a centre of commodities trading.

WHAT was the biggest challenge faced by your company or the industry last year and what are your expectations for 2009?

2008 was undoubtedly a tough one, not only for Bursa Malaysia, but also for all markets.

Generally, investors are choosing to remain on the sidelines due to the many uncertainties affecting the market and I am certain that this will continue until there are signs of economic stability from the US markets.

There is no doubt that we are impacted by this global contagion. However, I believe the country’s sound regulatory and fiscal economic system are key to contributing towards the resiliency of our market as a whole.

We are cautiously optimistic that the local stock market will remain fair throughout this year, despite the current fragile investor sentiments.

Yusli Mohamed Yusoff

Nevertheless, the bourse has retained a sustained level of interest among foreign investors, in which foreign participation makes up about 40% of the value of daily trades, even in the current bearish market.

Moreover, we are confident of the Government’s policies in ensuring that a business-friendly economic climate continues to further ease market recovery, which many analysts say may be as early as the second half of this year.

As a listed company and a market operator, we are certainly in a much better shape to withstand the external shocks than we were a decade ago.

We strongly believe that we have the necessary resources and measures to meet any challenges posed.

As a frontline regulator, we also have a duty to ensure that trading continues in a fair and orderly manner. We will also continue with our efforts at building a quality capital market.

The dismal market outlook does not mean that we are cutting back on market development and promotional initiatives. The exchange will still continue its efforts to build the market’s attractiveness and is committed to educate investors on information-based investment strategies, especially in the current volatile market.

What is the best performing division in a generally weak market?

The business of the exchange is very much market driven. While we have seen a significant drop in profits derived from the equities market, it remains the sector which generates the most revenue and profits for the group.

The derivatives market has been fairly stable following the global downturn. In fact, volume of the crude palm oil futures contract has remained steady despite the current volatile commodity prices and this indicates a sustainable growth for the coming years.

Are there areas in which your firm is diversifying towards?

With equities market declining by approximately 40% last year, investors are naturally concerned about the returns on their investment. To that end, the current economic climate has brought to light the importance and sustainability of Islamic-related investments.

More and more investors are slowly turning to syariah-compliant investments as a way to mitigate uncertainties in the markets and more importantly, as an alternative option equivalent to, if not better than, conventional products.

Investors are taking comfort in Islamic investment options due to their higher levels of transparency and stricter asset allocation requirements. For instance, Islamic REITs (real estate investment trusts), which fall in between equity and fixed income, offer the combination of good yields and low volatility that risk-averse investors are after.

The Islamic capital market sector has proven its growth potential and Bursa Malaysia will continue to channel its efforts to build Malaysia as an Islamic capital market hub in Asia.

An upcoming project in the pipeline is the development of an international spot-commodity platform, known as the Commodity Murabahah House or CMH for short.

This platform will start off as a single-commodity ringgit market and eventually evolve into a multi-commodity and multi currency market that will fulfil international market demands.

The first commodity which will be used under the CMH is crude palm oil. In time, CMH will open up to other asset classes to cater for other different types of commodities and assets.

At the same time, we will build upon our natural competitive advantage in the commodities sector. Malaysia boasts the largest plantation companies globally and is already home to the world’s successful crude palm oil contract, so I do see prospects for growth in the commodities sector over the next few years.

To kick-start the new year, Bursa Malaysia is looking at introducing thematic indices, namely in the palm oil plantation sector, in the first quarter of 2009. These indices will bode well for our goal of profiling Malaysia as the centre of commodities trading.

Through the above initiatives, Bursa Malaysia hopes to match the needs of issuers with investor requirements. We look forward to these initiatives to contribute towards the attractiveness and vibrancy in the Malaysian market.

Is your firm downsizing in view of market conditions?

Bursa Malaysia is already a forerunner in Islamic capital market investments and we are continuing our efforts to enhance our position as a preferred destination for listing, fund raising and investments in the region.

In line with this vision is the need to fortify the exchange with the most capable people.

We believe in continual development via infrastructure enhancements, broadening the product base as well as human capital development in order to remain competitive.

While a downsizing exercise may not take place, we will, as always, be wary of excess capacity, and will take the necessary action to rectify manpower inefficiencies.

As a very lean organisation, Bursa Malaysia will continue to practice prudent management measures to further improve operational and financial efficiencies.

To what extent is the strength of your firm’s balance sheet important at this time?

Bursa Malaysia feels that a strong balance sheet is essential, especially given the current market environment.

As the exchange business is mainly cash-generating, Bursa Malaysia has always managed to maintain a fairly strong balance sheet. Of course, our revenue for last year was certainly impacted by the global economic environment.

However, to further overcome the impact of the challenges of the current economic crisis as well as to manage shareholder value, the company is exercising prudent financial management measures across the organisation.


BURSA : [Stock Watch] [News]


For latest MSEB indices, charts and other information click here

  • E-mail this story
  • Print this story