KUALA LUMPUR (Jan 29): Bursa Malaysia Bhd (KL:BURSA) said approvals for large initial public offerings (IPOs) with a free float level below the standard 25% are governed by clear regulatory parameters and have not raised systemic concerns with index provider MSCI Inc.
Addressing market concerns that repeated approvals of lower free float for large IPOs could affect Malaysia’s index standing, the exchange’s chief executive officer Datuk Fad’l Mohamed stressed that the process is transparent and rule-based.
A recent case in point is Sunway Healthcare Holdings Bhd. On Jan 23, the healthcare arm of Sunway Bhd (KL:SUNWAY) secured approval from the Securities Commission and Bursa to list on the Main Market with a reduced public float of 18%. Such approvals are uncommon, but they have been increasingly granted for "mega-listings", including for MR DIY Group (M) Bhd (KL:MRDIY), 99 Speed Mart Holdings Bhd (KL:99SMART) and Eco-Shop Marketing Bhd (KL:ECOSHOP), when liquidity is deemed adequate.
“When free float is determined, we have very clear parameters… and based on that parameter, that number of free float is actually acceptable,” Fad'l told reporters during a briefing on Thursday, though he did not elaborate on what the parameters are.
He added that concerns expressed by market participants about recent MSCI actions were specific to Indonesia and not indicative of broader regional issues. “From the information we have, there’s no similar concern for it to apply to Malaysia,” Fad’l said.
His comments come after MSCI on Wednesday warned of a potential downgrade of Indonesia’s stock market to frontier-market status, citing "fundamental investability issues", prompting the Jakarta Composite Index to plunge 8.8% in a single day — its steepest fall since April 2025 — triggering circuit breakers. MSCI also said it would immediately pause some index changes, including additions, until regulators address concerns over tightly-held ownership of listed firms.
Indonesia’s minimum free float threshold is set at 7.5%, compared with Malaysia, Hong Kong and India’s 25%, and Thailand’s 15%.
Earlier on Thursday, Indonesia's Financial Services Authority and the Indonesia Stock Exchange held an emergency press conference and announced they would double their minimum free float requirement to 15%.
According to Fad'l, MSCI evaluates multiple investability criteria beyond free float alone, including liquidity, adjusted market capitalisation, accessibility, disclosure and transparency standards.
“A few Malaysian counters below 25% have not been viewed as material concerns for MSCI, so I guess allowances for certain free float IPOs have not triggered negative MSCI commentary,” he noted.
“And clearly, MSCI has not indicated any review or any change in how the free float will be assessed. And I think based on documents that we see, our disclosure and transparency standards remain strong.”
Fad’l emphasised that Bursa continues to adhere to its existing regulatory framework, noting that allowances for certain IPOs have not undermined Malaysia’s standing in global indices.
Boosting corporate performance, disclosures and investor engagement
Separately, Fad’l said Bursa is working closely with the Securities Commission to advance a corporate value-up programme. The initiative is aimed at improving market vibrancy and the fundamentals of public listed companies.
He said market vibrancy remains a core pillar of Bursa’s strategy, encompassing not only the attraction of large IPOs but also efforts to improve corporate performance and investor confidence. “Certainly that’s one area we are working on very closely… to help companies improve their corporate disclosures and strengthen investor relations and engagement,” he said.
As an initial step, Bursa recently launched the Bursa Malaysia Quality 50 Index and Bursa Malaysia Quality 50 Shariah Index, designed to highlight companies with stronger profitability, capital structure and earnings quality. “We want to demonstrate to the market that we do have high-performing companies,” Fad’l said.
He added that Bursa’s longer-term aim is to support underperforming public listed companies in improving their fundamentals, in alignment with broader capital market initiatives under the Capital Market Master Plan. “This is something that will be in the near future; very soon,” he said.