KUALA LUMPUR (March 9): The ‘MY Value Up’ programme will be introduced to prioritise value creation, bolster financial performance and raise visibility of public listed companies (PLCs) in Malaysia, a nod to the success of factor-based investing that has bolstered stock valuation in South Korea, Singapore and Japan.

Under the programme, the Securities Commission of Malaysia (SC) “will adopt a tailored approach, emphasising value creation and measurable performance based on the different PLC archetypes with the objective of raising the visibility of quality companies, catalysing re-ratings (where warranted) and establishing structured recovery pathways for laggards”, the SC said in the fourth Capital Market Masterplan (CMP4), which spans 2026-2030, launched on Monday.

The move, it said, will be supported by increased transparency and communication on corporate plans and performance with a view to stimulating greater investor interest and market activity.

“As an incentive, consideration will be given to launching an index (premium index) for top-performing companies, providing subsidised advisory support and listing-fee rebates to reinforce positive outcomes,” the CMP4 read.

Notably, Bursa Malaysia, on Jan 12 this year, introduced two alternative indices built on financial performance — the Bursa Malaysia Quality 50 Index (BMQ) and its shariah-compliant counterpart Bursa Malaysia Quality 50 Shariah Index (BMQ-S) — that prioritises companies with consistent profitability, prudent leverage and higher-quality earnings rather than market capitalisation.

It is understood that Bursa Malaysia had been in talks with PLCs on targets and the selection of suitable parameters that will result in a broader programme that can drive up valuations and ultimately raise the overall standards of the local exchange.

In the CMP4, the SC acknowledged that “the success of large PLCs in establishing valuation premiums will have large positive spill-over effects in attracting more domestic and foreign companies to raise funds in the Malaysian capital market”.

“This would, in turn, reinforce Malaysia’s position as a regional gateway and as an Islamic hub for ethical and sustainable products.”

According to the CMP4, PLCs will be classified into several groups to address different valuation challenges.

For undervalued but fundamentally sound PLCs, targeted disclosures and announcements will be encouraged to improve visibility and address market mispricing.

For weaker PLCs, there will be more rigorous measures such as structured turnaround plans with clear milestones to restore investor confidence.

For low-velocity PLCs, initiatives will also be introduced to improve liquidity with the aim of driving up investor participation.

The SC, which is reviewing the Malaysian Code on Corporate Governance (MCCG) to ensure it is fit-for-purpose in a rapidly evolving market, is also seeking to enhance the role of boards in promoting innovation and improving capital efficiency. “The SC may consider the introduction of tangible performance metrics such as total shareholder returns, return on invested capital and innovation for boards and management to be reported through publishing annual KPI (key performance indicator) scores and public disclosure.”

The SC is already working towards enhancing transparency by encouraging regular disclosures on value-creation targets and corporate transformation plans to strengthen investor confidence and improve market valuations over time.

To further strengthen investor confidence and improve overall market quality, the SC will also explore initiatives to review persistently non-compliant PLCs or dormant PLCs that weigh on liquidity and are undermining the market’s reputation.

“The SC would consider seeking enhanced statutory powers to direct and oversee exits, with clear safeguards for minority shareholders. Consequently, the current framework will be reviewed with a view towards emphasising early detection of concerns relating to the financial health of listed companies,” the CMP4 read.

The SC and Bursa Malaysia will review the current framework towards greater emphasis on the preventive aspect.

“Forward-looking indicators, with an even greater emphasis on data-drive analytics, would be used to enable early detection of a company’s deteriorating financial health. Companies at greater risk of distress will be subject to rigorous supervision and supplemented with more proactive interventions. Turnaround actions can then be initiated during an ‘action-plan’ window to provide PLCs more time and support to improve their performance,” it added.

The regulator wants regular disclosures on value-creation targets and structured transformation plans to “become the new norm, and boards will be expected to demonstrate greater accountability for setting and achieving the more ambitious performance targets”.

Heightened transparency on corporate performance will not only boost investor confidence and market valuations, but also enables representative bodies such as the Minority Shareholders Watch Group (MSWG) and Institutional Investors Council of Malaysia (IIC) to engage in informed dialogues with boards and management to ensure better alignment with investor expectations. The Institute of Corporate Directors Malaysia (ICDM) can then utilise these insights for further enhancements to board practices and director development, the CMP4 read.

Click here for all you need to know about the Capital Market Masterplan 2026-2030.

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