Posts tagged stock exchange

Foreign participation on Bursa Malaysia tops 50%

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Malaysia’s stock market Bursa Malaysia has enjoyed a sharp rise in foreign investment lately. This week, foreign participation topped 50% from May’s average of 30%. Foreign funds snapped up RM10.3 billion (US$3.4 billion) of local stocks as the market dipped and other ‘established’ emerging markest lost their appeal. The trend seems to be continuing into June.

Local funds were net sellers of RM1.3 billion ($432 million) in Malaysian stocks in May, while foreign funds were net RM1.6 billion ($532 million) buyers of Malaysian equities. The FTSE Bursa Malaysia Kuala Lumpur Composite Index was up by 24 points at the end of the month.

The UK’s Financial Times suggested investors were tiring of the more popular ‘BRICs’ emerging markets after news of sluggish growth, inflation and poor corporate governance. Foreign funds were adjusting their portfolios with a perception that Malaysia could handle inflation, and there were growth opportunities in oil and gas, property, plantations and renewable energy.

source & article: Business Times

Indonesia Exchange to launch new Shariah-compliant index

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The Indonesia Stock Exchange (IDX) is about the launch a new Shariah Stock Index (ISSI) to attract a more diverse range of investors and particularly those in the Middle East. The new index promises to offer a much wider variety of stocks than the 30 currently listed on the Jakarta Islamic Index.

The new index will contain 214 companies at launch, each already listed on the IDX and judged to be compliant in consultation with the Indonesian Council of Ulema (MUI). There will be a compliance review every six months. According to the Jakarta Globe, Shariah-compliant stocks should make up around 43% of the IDX’s total US$398 billion market cap and the list includes companies such as:

palm oil producer Astra Agro Lestari, gold miner Aneka Tambang (Antam), state-owned steel maker Krakatau Steel, vehicle distributor Astra International, consumer goods producer Indofood CBP Sukses Makmur and state telecommunications operator Telekomunikasi Indonesia (Telkom).

Under Islamic law, companies who engage in any business involving alcohol, pork, gambling, speculation or gain money from interest are haram, or forbidden. Lack of current information has restricted many potentially large Muslim investors from putting their money into the stock exchange, both in Indonesia and the Middle East. The ISSI seeks to tap into that increasingly wealthy demographic.

Australia-Singapore exchange merger rejected… for now

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Perhaps it was inevitable, given the precarious position of Australia’s current minority government — but this afternoon national Treasurer Wayne Swan issued a statement that he did not plan to approve the Singapore Exchange’s (SGX) merger/takeover of his country’s main stock exchange, the Australian Securities Exchange (ASX) on the grounds of national interest.

SGX’s US$8 billion offer needed Swan’s approval to proceed. While he noted that he hadn’t yet made a final decision, his statement to the Foreign Investment Review Board makes it clear the plan cannot succeed in its current form.

Swan’s party, the Australian Labor Party, holds only 72 of 150 seats in Australia’s federal parliament, and governs with the help of a handful of independents and minor party members who had expressed opposition to the takeover. As well as the Treasurer’s approval, the deal would also have required a change to Australian law to remove the ASX’s maximum 15% individual ownership restriction. Major opposition parties had also questioned the takeover, saying it would reduce the ASX to a branch office of a foreign exchange and result in most major trades taking place in Singapore.

Some have suggested the Treasurer favors a consolidation and is trying to obtain a more attractive deal for Australia, while the SGX says it will “consider appropriate responses”. While Australia’s exchange is larger, Singapore’s currently has a larger market cap and perhaps greater potential for growth in the short term. As well as a desire to compete against the larger Asian exchanges by merging, pride may be playing its part with each country eager to assert its status as a regional financial center. If this deal fails, both the SGX and ASX will be looking for alternative tie-ups and partnerships.

Singapore-Australia exchange merger tries to win politicians

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The Singapore Exchange (SGX) has sweetened its offer to Australia for the proposed acquisition of the Australian Securities Exchange (ASX), hoping to win the favor of reluctant politicians who must approve the deal in order for it to proceed. The offer, already a fairly generous US$8.3 billion, will now include a guarantee of equal Australian/Singaporean representation on the board of directors, with five each. Australia was previously given four seats. The total number of directors will also be reduced from 14 to 13, with the remaining positions given to independent directors.

The Australian government supports the deal but it does not hold a majority in either the lower or upper houses of the Australian Parliament. Both members of the opposition Liberal Party and the left-wing Australian Greens have expressed doubts or outright opposition to the merger, saying it is not in Australia’s interests. In return, exchange operators are making guarantees that key operations will remain in Australia.

If the deal is rejected, SGX and ASX could see themselves left behind as other major world stock exchanges line up to merge. The London Stock Exchange (LSE) and Toronto’s TMX exchange announced plans to join last week and Germany’s Deutsche Boerse is discussing links with the NYSE/Euronext.

source & article: The Star online

SGX upgrades as competition heats up for big Asian stock exchanges

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The Singapore Exchange (SGX) has introduced new measures designed to propel it into position as Asia’s most desirable place to list, by eliminating lunch breaks and establishing a S$194.96 million (US$151.5 million) “world’s fastest trading platform” called SGX Reach.

SGX Reach will be the first fast electronic trading system outside the USA and Europe. SGX, which wants to attract more listings but often struggles against Hong Kong and its closer local connections to win Chinese IPOs, is also pursuing an acquisition of the Australian Securities Exchange (ASX) worth US$8.4 billion. Improved technology, size and international reach may well be what it needs to fulfill its vision of regional dominance and global significance under ambitious CEO Magnus Bocker.

The new system claims a response time of 90 microseconds, and the ability to handle one million order-book changes per second. The London Stock Exchange Group’s ‘Turquoise’ platform, the current world’s fastest, has a response time of 126 microseconds. Despite the lightning fast times, exchanges still clear all trades made. Not to be outdone, the Hong Kong Exchange (HKEx) plans to extend hours and will fire up its own new system by the end of the year, which can handle 30-150,000 trades a second with a response time of nine milliseconds. The Tokyo Stock Exchange (TSE) will examine its trading hours again and will probably cut its lunch break by 30 minutes. It too is planning to speed up its trading system, which has crumbled under active trading demands a couple of times in recent years.

source & article: The Australian business

Forecasters excited by Indonesian stock prospects

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The Indonesia Stock Exchange (IDX) grew 46% and foreigners doubled their equities stake to US$2.2 billion in 2010. With stats like that, it’s no surprise expectations are high for 2011, even amid concerns for the global economy in general. After Thailand, Indonesia’s market was the strongest performer in Asia.

There are still hopes major ratings agencies will upgrade Indonesia to investment grade this year, attracting institutional investors from overseas. It currently ranks two grades below that level. Processed foods, cosmetics and hygiene products from companies like Unilever are finding new domestic customers, while the banking sector is expected to grow further as lending increases. Should China’s demand for natural resources and energy continue at 2010 levels, Indonesia will need to meet it.

While no downsides are evident at the moment, forecasters are always cautious of unexpected (and inevitable) events and possible shocks. It seems the major internal concern for Indonesia’s economy in 2011 is a fear of overheating, becoming a bubble if too many join the rush and share values rise too quickly.

source & article: Channel NewsAsia

see also on CNA: Indonesia keeps interest rates steady to curb ‘hot money’ inflows & higher-than-expected inflation

More Malaysian companies looking at London listings

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More Malaysian companies may be turning to London-based stock markets as a platform for going global as growth continues.

16 Malaysian companies are currently listed on the London Stock Exchange (LSE), including Aseana Properties and Kulim (Malaysia) Bhd on the main board. The LSE’s Alternative Investment Market (AIM) features Biofuels International Plc, Asian Plantations Ltd and Mobility One Sdn Bhd. According to the British High Commission, interest from Malaysia has been increasing in recent times after a period of little new activity over the past couple of years, and they expect it to pick up in 2011-12.

Malaysian companies are attracted to the UK generally for the same reasons as others: The UK is a long established financial center with strong intellectual property protection, an enviable pool of talent and creativity, and a network of investors. UK Trade and Investment also actively seeks foreign companies wanting to set up UK headquarters.

source & article: Business Times

Australian exchange chief strongly backs Singapore merger

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The chief executive of the Australian Securities Exchange (ASX) Robert Elstone has come out in support of a proposed merger between his exchange and the Singapore Exchange, saying the merger would help Australia’s integration into the Asian economy and marginalize it if “parochialism” sank the deal.

Singapore made a US$8.3 billion dollar offer to the ASX back in October, but the plan ran almost instantly into opposition from some members of parliament. A loss of Australian sovereignty and differences in values with Singapore were given as reasons. Any merger deal would need to be approved by Australia’s securities and competition watchdogs, the Treasurer, and parliament itself — where the current minority government holds a loose one-seat majority. Any major changes to the deal would need to be re-approved by Singapore.

Elstone said Australia was “indebted’ to the industrializing nations of Asia, many of which are the country’s biggest trading partners. The region’s (particularly China’s) insatiable demand for natural resource exports is seen as a key contributor to Australia’s current economic health. A merger would represent a “natural progression in the competitive regulatory evolution of Australia’s capital market,” he said. A merger would increase the size, liquidity pool and product diversification. It would also lead to a larger percentage of funds from foreign sources flowing through Australia, currently quite low compared to important financial centers.

source & articles: AFP via Yahoo! and The Australian

ASEAN stock market link expands to include Thailand, Philippines

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ASEAN Finance Ministers have agreed the region is underperforming economically and hope that new links between the region’s stock markets will see a capital inflows and an increase in market liquidity.

The Singapore Exchange and Bursa Malaysia are in the process of setting up a cross trading system allowing much easier access to investors from both countries. In an attempt to speed up integration, this system will now extend to include Thailand and the Philippines. The plan is to go live with three exchanges on board in the second half of 2011, with the Philippines joining in the first half of 2012. Integration will also see the formation of a new ASEAN asset class with common accounting standards.

Foreign investors are generally welcoming of the news, saying it will address ASEAN’s main disadvantage: a lack of liquidity. Others caution that increased inflows could create bubbles, and mention that it will be years before less developed countries like Cambodia and Laos are able to join in.

Finance ministers from across the region are currently meeting at the 7th Annual ASEAN Finance Minister’s Investor Seminar in Kuala Lumpur.

source & article: Channel NewsAsia

Bursa Malaysia highlights its unique features

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Bursa Malaysia is busy highlighting its unique features to distinguish itself from the region’s larger stock markets. CEO Yusli Mohamed Yusoff, speaking at the Global Islamic Finance Forum 2010 in KL, said Bursa Malaysia would set up an international board and expand its product range to attract more listings and investors from overseas.

Yusli said Bursa Malaysia’s key strength was its range of Islamic-friendly listings and services, hinting this was the kind of overseas interest the local market should be aiming most to attract. 88% of listed companies were shariah-compliant and they accounted for 64% of the total market cap, he said. Bursa is also working with regulators to make Islamic debt products more accessible to ordinary retail investors, and the Securities Commission is currently reviewing a proposed listing for a real estate investment trust (REIT) from a major company based in the Gulf Cooperation Council (GCC).

source & article: The Star

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