KUALA LUMPUR (June 20): Capital market players are divided on whether the government’s move to reduce stamp duty for shares trading on Bursa Malaysia to 0.1% of the contract value from the current rate of 0.15% will boost the overall trading sentiment on Bursa Malaysia.
This is because for institutional investors who trade in large volumes and value, the reduction in the stamp duty rate doesn’t make much of a difference in their investment decisions, said Astramina Advisory Sdn Bhd managing director Wong Muh Rong.
“This [policy] is probably more applicable for retail investors. [But] For the overall capital market sentiment, it won’t make much of a difference as the cap is not more than RM1,000.
“For institutional investors, it really won’t make a difference in their investment decision, whether or not it is 0.1% or 0.15%, as they will be investing way above RM1,000,” said Wong when contacted by The Edge.
Nonetheless, the Association of Stockbroking Companies Malaysia (ASCM) commended the government’s decision to cut the stamp duty for shares traded on Bursa Malaysia, demonstrating the government's dedication to fostering an inclusive and dynamic financial landscape that benefits all stakeholders.
“By encouraging retail investors to actively participate in the capital market, these measures align with the pillar of creating market vibrancy, as outlined in the government's strategic agenda. We firmly believe that this reduction in stamp duty will stimulate market activity and liquidity, attracting greater investor interest and bolstering trading volumes,” said ASCM chairman Datuk Dr Azman Manaf and its president Chew Sing Guan in a statement to The Edge.
Apart from the stamp duty reduction for shares trading on Bursa Malaysia, Prime Minister Datuk Seri Anwar Ibrahim also announced that capital market regulators Securities Commission (SC) and Bursa Malaysia will implement reforms this year to expedite the initial public offering (IPO) process, and reduce time-to-market to ensure the country’s continued competitiveness.
ASCM’s Azman and Chew said this move showcases the government's commitment to enhancing efficiency and effectiveness within the industry.
“By identifying and addressing obstacles that impede market participants, the capital market regulators actively contribute to creating a seamless and conducive environment for investment and growth.
“Furthermore, by streamlining processes and reducing barriers, these initiatives have far-reaching benefits that extend to all stakeholders involved in the capital market ecosystem.
“This, in turn, encourages more businesses to go public, stimulates capital formation, and provides greater opportunities for investors to diversify their portfolios,” they said.
Astramina’s Wong suggested that the fastest way to speed up the listing process is to give initial public offering (IPO) advisers more accountability in the listing process.
“The key is to shift the responsibility away from the authorities to the advisers. At this point in time, everything needs to be cleared by the authorities before a prospectus can be published. We need to move away from this, to enable the process to be done more speedily.
“The speed of a listing process is an important criteria when companies decide where to list,” Wong said.
She suggested that the authorities need to let the adviser decide what needs to be disclosed. Should there be a case of under-disclosure by the company, then the authorities can get the company to conduct an updated disclosure after the listing.
Meanwhile, Malacca Securities Sdn Bhd head of research Loui Low said the government could perhaps formulate policies to attract start-up companies and foreign-origin companies to list on the local stock exchange.
In view of the current global economic uncertainty, which has impacted the Asean regional stock market, including Bursa Malaysia, Anwar said the Ministry of Finance and SC are looking at policies to enhance the capital market, including facilitating and attracting family offices into Malaysia and widen the definition of sophisticated investors.
A family office is a private wealth management advisory firm that serves ultra-high-net-worth individuals.
To compete with Singapore — which is famous for being a hub for managing the wealth of the ultra-rich — Astramina’s Wong reckoned that Malaysia needs to introduce attractive propositions to garner the interest of individuals who have already set up family offices in Singapore, in terms of incentives and infrastructure.
“What the government can do is to give more favourable tax exemptions and policies. In the instance of the tax incentive, Malaysia does not have tax investment gain for shares. I feel this should also cover properties.
“Foreigners who buy properties through a family office, for example, should be able to enjoy some exemption on RPGT [real property gains tax], which is currently very strict,” she said.
Foreigners are charged a rate of 30% of RPGT when they sell their property within the first five years, while a 10% charge rate applies when they sell their property, five years or more after purchasing it.
Meanwhile, Wong said that the authorities should not be the ones to define sophisticated and non-sophisticated investors, suggesting that authorities allow companies that are listed on Bursa Malaysia to be able to buy and sell shares regardless of whether they are sophisticated or not.
“Therefore, an investor should not be discredited from buying a LEAP market share for example, because they are not defined as a sophisticated investor. This is because what is more important and needed to uplift our market is currently liquidity.
“A vibrant capital market requires deep liquidity and the participation of many different investors,” she said.