Thursday, July 14, 2011

PM urges funds to take part in capital market

LONDON: Prime Minister Datuk Seri Najib Tun Razak on Thursday, July 14 called on global fund managers to take advantage of various opportunities arising from developments in Malaysia's capital market.

Addressing the capital market roundtable organised on the third day of his official visit to the United Kingdom, he said a developed capital market had a
significant role to assume in Malaysia's quest to become a developed nation by 2020.

"All of you here today as global fund managers have the expertise we need and all of you can play a meaningful role in helping us achieve our future
success," said Najib, who is Finance Minister.

The prime minister, who began his visit on Tuesday, took the opportunity to highlight developments in the Malaysian capital market landscape.
Najib said Malaysia today had one of the most comprehensive capital markets in the region, with its combined equity and debt markets having grown to US$667 billion in 2010, from US$240 billion, in 2000.

It is projected to triple to between US$1.5 trillion and US$1.9 trillion in 2020.

He said the country's Economic Transformation Programme would create further momentum for growth and open up opportunities for issuers, intermediaries and investors.

Najib pointed out to the most senior members of some of London's leading financial institutions that Malaysia had a broad and diverse economy on which to build its capital market.

For years, he said, Malaysian small and mid-sized companies in industries ranging from agriculture, natural resources manufacturing and services had
provided many attractive opportunities for long-term investors.

Najib noted that over the past 10 years, 241 public listed companies'' or roughly a quarter of listed companies were able to achieve market
capitalisation growth of more than 10 per cent, annually.

"Historical trends suggest that as Malaysia's capital market achieves maturity, growth in the debt and derivative markets will outpace growth in the
equity market," he said.

He said, in particular, Malaysia was likely to replicate the pattern in developed markets where institutional funds rapidly outgrew the economy.

Assets under management projects are forecast to compound by more than 15 per cent each year, from US$126 billion in 2010, to US$530 billion in 2020.

The unit trust industry's penetration rate is expected to almost double from 18 per cent to 34 per cent over the same period, signifying that strong
demand for investment management services and quality assets will underpin the growth of Malaysia's capital market.

Touching on opportunities in Islamic finance, Najib told his audience that Malaysia was home to the world's largest Islamic banking and financial market,
accounting for 66 per cent of global sukuk issuance last year, and have 184 funds with US$8 billion in assets under management.

"Over the next 10 years, our Islamic capital market, already worth US$370 billion, is set to triple in value to US$970 billion," he said.

Najib said Malaysia wanted to strengthen the service infrastructure to facilitate more cross-border flows of Islamic products and services, encourage
the growth of areas of high-value activities and attract highly-skilled people in efforts to build the Islamic fund management industry.

Turning to opportunities from regional growth, he said Asean finance ministers and regional securities regulators were implementing initiatives to promote greater integration of the regional capital market.

He noted that standards for cross-border offerings had been established, while various regional exchange initiatives for the branding of Asean as an
asset class had been put in place.

Further measures in the pipeline include exchange linkages, cross-listings, and the mutual recognition of prospectus registration and collective investment schemes.

"Beyond Asean, Malaysia became the first emerging market to be recognised as an approved investment destination under China's qualified domestic
institutional investor scheme," Najib told the gathering.

Asian companies are also being encouraged to use Malaysia as a base for their regional expansion either through strategic alliances or through
seeking a listing on Bursa Malaysia, he added. - Bernamab

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