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CAPITAL MARKET AND REGULATORY UPDATE

SC MALAYSIA TO ALLOW REGULATED SHORT SELLING OF CORPORATE BONDS TO BOOST BOND MARKET LIQUIDITY

Securities Commission Malaysia (SC) has brought into effect a new guideline to allow the regulated short selling of corporate bonds in the Malaysian capital market.

17 April 2017

VOICE OF MSWG

Capital Market Update

The recent surge in retail interest in the local bourse while exciting, was probably driven by spill over interest from interest in large-cap stocks and expectations for an improved earnings performances in 2017.

Foreign investor interest has also helped boost sentiment, with reports indicating that nine (9) straight weeks of foreign buying for a year-to-date total of RM6.4 billion already amounts to more than twice the total amount of outflows (of RM3.01 billion) in all of 2016.

However, it is important for minority shareholders to continue taking heed of fundamentals instead of being lured by fast, easy gains in smaller, second-and third-liner stocks, where some have recently even chalked up limit-up performances.

Capital flows have always been transient and while large foreign funds are able to absorb short-term volatility, small investors, by and large, cannot -- hence the constant need for informed and nuanced investing.

Turning to a different topic, as the peak period of AGMs approaches, it may be pertinent to highlight the following:

MSWG’S QUICK TAKE ON-ONGOING CORPORATE DEVELOPMENTS

MASTER-PACK GROUP BERHAD (“MPB”) / GLOBETRONICS TECHNOLOGY BERHAD (“GTB”)
As reported in the media on 31 March 2017, the Malaysian Anti-Corruption Commission (MACC) has remanded MPB’s Group Executive Chairman Dato’ Syed Mohamad Bin Syed Murtaza for investigations involving Yayasan Bumiputra Pulau Pinang Bhd, which is one of the major shareholders of MPB. Datuk Syed Mohamad is also an Independent Non-Executive Director in GTB.

MSWG’S COMMENTS:
Both MPB and GTB in their announcements made on 31 March 2017 stated that the remand of Dato’ Syed Mohamad by MACC would not or not be expected to have any operational, business or management impact on their companies. We hope that Dato’ Syed Mohamad would voluntarily take a temporary leave of absence amid the MACC’s investigation.