SINGAPORE, Sept 5 — Malaysia’s stock exchange is looking to loosen the grip of large domestic investors on the market to encourage more trading and attract foreign investors to the best-performing bourse in Southeast Asia.
Kuala Lumpur’s US$262 billion (RM1.13 trillion) benchmark index of 30 of the largest companies has risen 15 per cent in 2024 and is set for its strongest yearly performance in well over a decade as foreigners tiptoe back to a market buoyed by improving economic growth and a rising currency.
“There is liquidity looking to be deployed now that traditionally would be (flowing to) North Asia or India or Vietnam. They want technology stocks.
“They are looking for a certain liquidity … and so from the exchange perspective, we will engage institutional shareholders who have these assets to encourage more free float,” Bursa Malaysia chief executive Muhamad Umar Swift told Reuters in an interview yesterday.
He did not give further details but said this brought a follow-on challenge of finding new places for institutions to invest, which will take time.
Buying and selling in large volumes has been a perennial bugbear for foreign investors in Malaysia, with its pension and sovereign wealth funds sitting on huge blocks of some of the biggest and best-performing companies’ shares.
The free float of Malayan Banking Berhad, for example, the largest stock on the KLSE, is 43 per cent, according to LSEG data, and it is below 60 per cent for the top three stocks.
Foreign money is flowing into the Malaysian stock market, whose overall market cap is over RM2 trillion (US$460 billion), but according to Copley Fund Research, only 38 per cent of global emerging market funds have any Malaysia exposure at all.
“What we are now seeing is there’s still capacity left, and it’s looking at Malaysia. I think there is a call to action.
“Everyone wants to see repeatability. They want to see continued growth,” Umar said.
The rally has also attracted listings, with US$1.3 billion (RM5.63 billion) raised in Malaysia so far this year, according to LSEG data, double what had been raised in the same period a year earlier, and Umar said he was looking at a healthy pipeline into 2026.
Mini-market chain retailer 99 Speed Mart Retail Holdings is due to go public in a US$509 million (RM2.2 billion) debut next week — the country’s biggest listing in seven years.
So far, investors are tuned in.
William Blair’s emerging markets growth strategy portfolio manager Vivian Lin Thurston was the first investment professional from her firm to visit Malaysia in the last decade.
“It is a relatively small equity market which was out of favour for a long time until recently. Now, Malaysia has started to look interesting again,” she said.
— Reuters