Saturday September 8, 2012
SCís move will enable public to tap directly into market
PETALING JAYA: The Securities Commission's (SC) move to provide retail investors with direct access to invest in bonds and sukuk is a good move, provided there is liquidity for investors to exit.
“There will be more products for brokers to sell and investors should enjoy good dividend yields, especially those guaranteed by the Government.
There were several issues to be ironed out including whether existing brokers could sell these bonds or whether they needed a separate license to do so, Lim added.
“The ringgit bond markets has proven itself as a highly investible asset class, with more than 20 years of credit default history behind it straddling many global crisis including the 1997/98 Asian crisis and the current European sovereign crisis in 2012,” Lee said.
Lee said as Malaysia was a very high-savings nation where the savings rate was more than 32% of gross domestic product, it was good to widen the range of investible assets for retail investors beyond fixed deposits, equity and property.
“The ability to invest in longer tenure fixed-rate securities caters much better to the longer-term financial planning requirements of individuals.
“We are very supportive of the gradual approach taken by the SC as bonds are relatively new to retail investors even though it is now a very mature market for both institutional investors and corporates across Malaysia,” Lee added.
“Now retail customers can invest in the sukuk market and have a share of the sukuk pie. We would like to compliment SC for their great efforts in establishing this framework.
“Corporates should not look at it as a hassle. If you can get a broader distribution from retail, you can basically access a new set of investors. This framework reduces the hassle as it comes up with a simplified prospectus,” he said.
The feedback from the man-in-the-street also appears positive.
A 60-year-old retiree who invests regularly in the market said he welcomed the move by the SC.
“Right now, I am buying blue chips like Sime Darby Bhd and Bursa Malaysia Bhd for their stability. I would definitely consider bonds as I want something stable and recurring. I cannot really take the volatility in the market anymore,” said the retiree.
However, he said the bonds must give reasonable returns to investors.
“It will depend on the returns and minimum capital I am allowed to put in for the bond. If the minimum capital is about RM100,000, then I would definitely be interested.
“Returns cannot just be slightly above fixed-deposit rates. It should at least allow investors to fight inflation. A return of 6% to 8% would be reasonable,” said the retiree.
From a potential bond issuer's point of view, a managing director of a public-listed company said he would not be “very interested” to issue bonds to retailers.
“Even to manage my company's shares on Bursa Malaysia, it is already such a headache. As it is, our market is already quite illiquid. So what more raising bonds. No thanks,” he said.