MAS asks Malaysia to clarify position on stock market trading link

MAS asks Malaysia to clarify position on stock market trading link

File photo of the logo of the Monetary Authority of Singapore at its building in Singapore
The logo of the Monetary Authority of Singapore (MAS) is pictured at its building in Singapore. (Photo: Reuters/Edgar Su)

SINGAPORE: The Monetary Authority of Singapore said on Wednesday (Jun 6) that it has asked Malaysia to clarify its position on a proposed link between the countries' stock exchanges.

The comments came after Malaysian Prime Minister Mahathir Mohamad said at a media conference earlier in the day that his new government would review a project announced by the previous administration to form a trading link between Bursa Malaysia and the Singapore Exchange.

"MAS has asked the Securities Commission Malaysia (SC) to clarify its position on the planned stock market trading link between Bursa Malaysia and Singapore Exchange, and will await the SC’s update on the matter," the Singapore central bank said in response to queries from the media. 

Regulators from Malaysia and Singapore had announced in February that the two countries would set up a stock market trading link by the end of this year.

The trading link would allow investors to trade and settle shares listed on each other's stock market more conveniently and at lower costs. It would also cover post-trade arrangements like the clearing and settlement of the stocks traded.


InterPacific Securities head of research Pong Teng Siew said the review of the Bursa Malaysia-SGX Link could involve either the nature or the structure of the trading link, or it could also mean the link being abolished, which he believed was unlikely.

"The trading link aims to promote access to Malaysian stocks for foreign investors and vice-versa, so the review could be something more on the structural review rather than a cancellation.

"Perhaps the review could also include the merger of both exchanges, but I do not think so," he told Bernama.

Nazri Khan Adam Khan, CEO and chief investment officer at Hermana Capital Bhd, believed that the review was aimed at boosting market liquidity, especially among the retail participants on both stock markets.

“If the government plans to cancel it, the move will potentially upset retail investors because there are a lot of Singaporean retailers who are interested in Malaysian stocks. It will have repercussions on the retail participants and market liquidity.

"The new government would have to find ways and options to drive market liquidity again," he said.

However, both Pong and Nazri opined that the review would not have much impact on local equity performance, at least not in the immediate term.

MIDF research analyst Danial Razak agreed that the review was unlikely to have a huge impact on the underlying sentiment.

"Assuming that the trading link is to be scrapped off, we do not think it will have a material impact on the overall sentiment," he said.

At a media conference after chairing a Cabinet meeting on Wednesday, Dr Mahathir was also asked if the government had discussed replacing Bursa Malaysia CEO Tajuddin Atan.

Tajuddin was appointed to head Bursa Malaysia in 2011. Previously, he had been group managing director of RHB Capital Berhad.

“It was not discussed. I did not see it (the proposal) on the table,” Dr Mahathir replied.

Dr Mahathir's Pakatan Harapan pulled off a shock victory at the Malaysian general election last month, ending the rule of Barisan Nasional, which had led the country for six decades since independence.

The new government led by 92-year-old Mahathir is seeking to unearth suspected graft that took place during former Prime Minister Najib Razak's near-10 years in power, casting a cloud over the future of several top officials.

Dr Mahathir accepted the resignation of the central bank governor on Wednesday, the latest in a string of departures of top officials.

Source: Agencies/CNA/aj