Foreign shareholding in the Malaysian equities market remains steady at above 20 per cent but slipped to 20.2 per cent in 2022, compared with the pre-pandemic level of 22.3 per cent in 2019.
Bursa Malaysia Bhd chairman Tan Sri Abdul Wahid Omar said although the difference is only about two per cent, it is a bit challenging to see the foreign investment go back up to the pre-pandemic level by the end of this year due to current global market uncertainties.
He said there will be a lot of fund movements between the emerging markets and the more developed markets following the US interest rates increase as there will be a typical flight to safe-haven assets and the US dollar assets.
This will affect the emerging markets. But having said that, as global monetary policy returned to normalisation, the countries which have got strong financial institutions will tend to benefit.
Malaysia has seen quite a fair bit of inflow into banking stocks.
So, with the expected normalisation of interest rate here in Malaysia too, more investors will come into the financial services sector as well. But I do not think it will go to the pre-pandemic level, to the extent, Bernama reported him saying at the launch of the third Public Listed Companies (PLC) Transformation Programme Guidebook entitled “Strengthening Stakeholders Management and Investor Relations (IR)” in Kuala Lumpur today.
However, he shared that the 20.2 per cent level of foreign inflow currently is already at the floor and looking at the trends in the first seven months of this year, it is already net positive foreign investments, with inflows of about RM6.2 billion to date.
Therefore, Abdul Wahid believed that if the economy improves and the PLCs perform, the shareholding percentage will start to recover.
The performance of the FTSE Bursa Malaysia KLCI benchmark index, which is just over the 1,500-level currently, thus needs to improve for the broader market to be attractive to investors.
Against this backdrop, it is clear that Corporate Malaysia must improve its performance, especially as global competition intensifies, he said.
Meanwhile, chief executive officer Datuk Muhamad Umar Swift said Malaysia enjoyed a strong 8.9 per cent Gross Domestic Product growth for the second quarter of this year on the back of strong export performance as well as domestic demand.
Moving forward, the country will see companies returning to profitability. If you look at the value of Malaysian PLCs today, that is why foreign investors are buying. We have good value, he said.
On another note, he said, the ability to raise capital in the domestic market is still strong as seen in the performance of 24 initial public offerings on Bursa Malaysia year-to-date, of which 21 are all trading above the offer price.
Touching on the third guidebook launched today, he commented that good IR is key to helping listed companies enhance their visibility, gain subsequent access to capital, as well as enjoy better valuation for their companies.
In an increasingly competitive business environment, investors are also demanding more transparency on environmental, social and governance matters, before they invest in a company. So, we are also focusing on encouraging companies to talk to their investors. That is what book three is about, he added.
Guidebook 3 covers distinct aspects of effective stakeholder management and IR as well as crisis communications when engaging with the many stakeholder groups of a company, which include guidance on developing a robust crisis communication approach, operationalising IR as well as examples of good stakeholder management practices.
Adoption of the guidebook’s recommendation would help create a better understanding of the PLCs among the investor community.
