THE Malaysian bourse is mulling a plan to improve valuations of local companies as it seeks to lure global investors amid similar programs from regional peers.
Bursa Malaysia Bhd
. is considering a "formalized framework” where companies may be given targets on metrics such as price-to-earnings ratio, return on equity and free float, chief executive officer Muhamad Datuk Umar Swift said in an interview last week.
Malaysia is among a growing number of countries in Asia - including Japan, South Korea and China - looking to drive shareholder returns through corporate reforms and lift depressed valuations in efforts to attract more foreigners. This comes amid a listing boom and renewed optimism in local shares as investments pour into the country’s data center sector.
While the bourse is not looking to emulate the Tokyo Stock Exchange’s "name-and-shame” list, it’s taking cues from such programs to encourage listed firms to "take responsibility for driving better value,” Umar said. "If a company is not achieving those targets, the exchange will engage with its board and have conversations.”
Malaysia’s benchmark FTSE Bursa Malaysia KLCI Index has gained more than 13% so far this year, among the best performers in Southeast Asia. The exchange operator recorded a 66.8% increase in average daily trading value for on-market trades in the first half of the year compared to the previous corresponding period.
Bursa Malaysia is targeting 50 initial public offerings in 2025 compared with 42 this year, Umar said. There is a "healthy pipeline” of listings going into next year, including some large ones in the health-care and telecom sectors, he added.
Regulators have committed to reducing the timeline for the IPO application process to three months from six in efforts to spur more listings. Among potential offerings on investors’ radar is an IPO of Sunway Group’s health-care unit that could raise as much as 3.5 billion ringgit ($852 million). If the deal materializes, it would be the country’s biggest since 2017, according to data compiled by Bloomberg.
Umar also expects more regional companies, including Singapore-based ones, to seek dual listings or raise capital in Kuala Lumpur, which would raise the profile of the local equity market.
"You have good and improving performance in Malaysian corporates. We just want to keep that momentum,” Umar said. "That creates excitement in investors as well as companies seeking to list.” - Bloomberg
