Connecting the power of capital to a nation's vision

By: Datuk Umar Swift, Chief Executive Officer, Bursa Malaysia May 2019

A capital market is commonly described as ‘up’ or ‘down’. In the rush of our modern world, coupled with social media being mistaken for genuine news, a market is often shrunk down to labels, symbols and colours, such as ‘red’ or ‘green’, ‘growing’ or ‘shrinking’ and even ‘big’ or ‘small’. These simplistic statements rarely provide proper insight. They are also the reason that many prime opportunities slip by unnoticed and value is left uncaptured.

Bursa Malaysia believes that a capital market is about making connections. In its most basic form, it connects capital to businesses, turning idle capital into fuel that enables businesses to drive growth. But behind this simple definition, there are five key areas where these connections also drive national progress - in economies, societies and across entire regions.

Connecting businesses to a global base

Malaysia’s capital market has supported the creation of regional champions and global players including household names such as AirAsia, Maybank, Sime Darby, IHH Healthcare, Petronas, Maxis, Axiata, CIMB, and Public Bank amongst others. They’ve grown, captured profitable segments, and delivered steady profits. They also provide many opportunities to harness and train the capabilities and exposure of Malaysian talent.

The connections also work in the other direction where global or regional businesses build relationships with local partners. It’s not just about representative offices, but entire factories, research labs and other high-value operations. Today, businesses operate in sectors as varied as electronic manufacturing and chemicals, to packaged foods and even hospitality for both local and international communities. The value created is far-reaching and mutually beneficial - businesses provide employment and talent development across a broad segment of society. They also signal an openness and willingness to grow, collaborate, and trade with an increasingly borderless world. Building sustainably upon these strengths would see us welcoming higher-value businesses – an attractive investment proposition and driver for the nation’s development.

Connecting to the future

Nimble and highly-motivated SMEs, the lifeblood of a nation’s economy, have the opportunity to become future regional and global champions. Flush with ideas and energy, SMEs need capital markets to help connect and drive these critical ingredients and also provide greater visibility and awareness. In emerging economies around the world, SMEs contribute up to 60% of total employment and up to 40% of the nation’s GDP [1]. To meet the requirements of listed companies, SMEs need to develop robust business practices such as good corporate governance and material economic, environmental and social risk assessments. For SMEs, these efforts help strengthen their business models and competitiveness at a crucial stage in their development.

Connecting Malaysians to the idea of investing

Imagine a nation of savvy investors who understand and appreciate value and can harness and develop it. It’s a big and worthwhile goal. Bursa Malaysia continually develops opportunities to help investors of all sizes and experience levels. There are various products that provide appropriate exposure, no matter if it is broad and general, or narrowly targeted to specific segments, or philosophy-based, such as a complete suite of products and services for Shariah investing. These are also backed by various education programmes in the form of seminars, workshops and digital resources. Every day, we reach out to more Malaysians, enabling, enhancing and training their ‘inner investor’.

Connecting innovation to progress

Innovation isn’t always about the newest idea or product. Sometimes, it is about building the right connections between strengths that exist and nascent long-term trends.

An example is Islamic finance. As a long-recognised leader, Bursa Malaysia continues to build upon its success, launching a number of innovations. These products and end-to-end investing platforms are world-firsts and have quickly garnered global recognition.

These markets also help us appeal to the movement amongst international investors towards socially responsible investing (SRI). In general, Shariah compliant investing and SRI are closely related, sharing a number of principles in common. This includes developing sustainable business practices that create positive benefits across society, in addition to developing transparency, as well as mutually-beneficial and balanced development.

Another connection comes from the Malaysian crude palm oil futures (FCPO) contracts, a global benchmark for many decades now. Price predictability and stability in a commodity of this nature impacts an immensely long value chain with far-reaching effects. It helps keep economic value and social opportunities sustainable all the way from farm to fork.

A recent innovation is Bursa Malaysia’s Leading Entrepreneur Accelerator Platform (LEAP) , which provides greater accessibility to capital and visibility that can help entrepreneurs see through their challenges and drive growth. Although still ‘young’, as at end 2018, companies listed on LEAP have seen their market capitalisation increase by 49% on average.

Connecting our ambitions, purpose and clarity

Seeing a market as a series of far-reaching connections between capital, business and society provides a check-point. The scale of what a well-run, liberalised and innovative capital market can provide for the nation is immense and humbling in many ways. We can always look at the world-leading innovations that are now in place, the notable global and regional champions we have helped build, the innovations that help us swim with the current of global investing practices, and the efforts to train future champions amongst the entrepreneurial-minded.

But rather than view these successes as something to lean on, it is our preference to view them as platforms from which we can bring forth more development. This is done by creating more of these kinds of connections across a wider group of parties and giving them the right shape and form that they may reach deeper into our society and deliver the kind of value that continues to build for generations. As such, please do not hesitate to approach us as we continuously seek to collaborate in a variety of ways that will allow us to capture new opportunities, innovate, and remain relevant in this fast-changing landscape.

In short, creating opportunities and growing value is a lifelong pursuit. It is a goal that we at Bursa Malaysia take to heart, as we put our minds and souls into developing the connections that bring it all together.