KUALA LUMPUR: Despite being a good recipe to boost the capital market, the measures announced by the Prime Minister need to be translated into action, says Universiti Keusahawanan Koperasi Malaysia Assoc Prof Abu Sofian Yaacob.
“One factor that has a direct influence on the capital market is the stability of the government of the day.
“Investors would like to see a stable and receptive government.
“Another factor is a stable foreign exchange rate compared to the major currencies. It would give an indication as to the profitability translation with the home country’s currency,” he said.
Abu Sofian said the government should also encourage and facilitate local investors and enterprises to invest more, especially in new and innovative economies.
UOB Kay Hian Securities (M) Sdn Bhd head of wealth research and advisory Mohd Sedek Jantan said the immediate impact of the lower stamp duty is encouraging greater participation of local investors in the capital market.
He said potential effects may be wide-ranging.
“Although (market) volatility may rise with the increased transactions, the situation may only be temporary.
“The impact of the lower stamp duty on volatility is unclear, and in some cases may be positive.
“This is due to the market being occupied by a sufficient number of rational, fundamental traders whose trading could stabilise the market by moving prices closer to the true underlying value,” he said.
Bank Muamalat Malaysia Bhd chief economist and social finance head Dr Mohd Afzanizam Abdul Rashid said the move to reduce the stamp duty for shares traded is aimed at lowering the cost of securities transaction for investors.
“(It will) encourage investors to come in and invest in Bursa Malaysia, be it institutional or retail investors.
“When there are more players in Bursa Malaysia, it will improve the liquidity of the stock market and help promote a better price discovery mechanism for the listed share prices,” he told Bernama.
The Prime Minister yesterday announced that the stamp duty rate for shares traded on Bursa Malaysia will be reduced from the current 0.15% to 0.1% of the contract value from July onwards, subject to a maximum cap of RM1,000 per contract.
Mohd Afzanizam said the Prime Minister remains committed to pursuing structural reforms to attract high quality investments.
This, he said, could be seen following the announcement to implement reforms this year to make it easier and faster to list on the exchange by expediting the initial public offering process and reducing time-to-market.
“In a nutshell, it’s a medium to long-term reform which, if executed well, would improve the potential growth for Malaysia. Investment is always a key component for the economy as it will encourage innovation and better productivity gains,” he said.
During the launch of InvestEd (the new name of the Capital Market Graduate Programme) yesterday, Anwar, who is also the Finance Minister, announced several measures to beef up the capital market and create more wealth for the people.
