This article first appeared in The Edge Malaysia Weekly on August 10, 2026 - August 16, 2026
THE growing number of Bursa Malaysia-listed companies holding sizeable investment portfolios has sparked debate on whether there is sufficient disclosure for shareholders in assessing companies’ investment decisions.
Neither Minority Shareholders Watch Group (MSWG) CEO Dr Ismet Yusoff nor Tradeview Capital chief investment officer Nixon Wong are opposed to having companies invest surplus cash, but they stress that the rationale, governance and disclosure surrounding these investments are ultimately more important than their size.
Ismet says minority shareholders should not judge a company simply by the proportion of investment assets on its balance sheet.
“The proportion of investment assets on a PLC’s balance sheet is not, in itself, the key concern,” he tells The Edge. “What matters more is whether these assets are aligned with the PLC’s strategic goals, complement its core business rather than distract from it, deliver risk-adjusted returns and contribute to sustainable long-term shareholder value.”
He notes that companies must also remain mindful of Bursa’s listing requirements relating to “cash companies”, where at least 70% of consolidated assets comprise cash, short-term investments or a combination of the two.
However, some quarters believe there is room for improvement in existing disclosure requirements.
Although listed companies generally comply with accounting standards by disclosing investment assets in their financial statements, Wong says such disclosures often explain what companies own but not why they own them.
“In many cases, companies comply with accounting standards by disclosing the composition and fair value of investment assets, but these disclosures don’t provide enough information for investors to evaluate management’s capital allocation decisions,” he says. “Accounting disclosures explain what is owned, but, often, not why.”
The lack of explanation becomes more significant when investments represent a substantial proportion of shareholder funds.
“If substantial amounts of shareholder capital are invested outside the operating business, management should explain the rationale behind it, the limitation on business growth, the potential return enhancement from holding financial assets and whether the deployment is temporary or long term,” Wong says.
“Without that, investors may struggle to determine whether management is exercising discipline or simply lacking growth opportunities. Why not just pay back to shareholders through dividends if it is for the latter?”
Ismet echoes the call for greater transparency, saying shareholders should actively question boards whenever investment assets become a significant part of the balance sheet. “Minority shareholders should seek greater transparency on the rationale for holding such significant investment assets, their expected returns, governance and risk management framework, and the extent to which these investments align with and support the company’s long-term strategic goals.”
Governance matters more than rules
Rather than imposing blanket regulations, both Wong and Ismet believe that the focus should be on improving the quality of disclosures.
Wong says investors would benefit from understanding companies’ investment governance, including permitted asset classes, exposure limits, approval authority and board oversight.
“Such disclosures would provide greater confidence that investments are being managed within an appropriate governance framework rather than through ad hoc decision-making,” he adds, noting that greater transparency would also help prevent potential misuse of shareholder funds.
The duo urge Bursa and the Securities Commission Malaysia to consider enhanced disclosure requirements for companies with substantial investment portfolios, provided any new rules strike a balance between transparency and compliance costs.
Rather than introducing blanket reporting obligations, Wong suggests additional disclosures could be triggered once investment assets exceed a specified threshold. These could include information on investment policies, portfolio performance metrics, concentration risks, liquidity analysis and how investment activities support corporate strategy.
“The objective should be enhancing transparency for investors to make better investment decisions rather than for the sake of setting rules for companies to comply with,” he says.
Look beyond investment gains
Investors should not focus solely on reported profits when evaluating companies with large investment portfolios. Wong says shareholders should compare returns generated by financial assets against the company’s cost of capital and borrowing costs while distinguishing between realised gains and unrealised mark-to-market movements.
Among the warning signs, he says, are companies reporting declining revenue and operating profit while maintaining headline earnings through investment gains, increasing dependence on fair value adjustments and limited reinvestment in core operations despite holding substantial cash resources.
“Where investment portfolios appear to substitute for operational growth without acceptable explanation or oversight, minority shareholders have legitimate reasons to question whether management is fulfilling its fiduciary responsibilities in allocating capital,” Wong says.
For Ismet, good corporate governance ultimately comes down to accountability. “Where investment assets represent a significant proportion of a PLC’s balance sheet, minority shareholders should expect strong accountability, effective risk management, prudent capital allocation and transparent reporting on the performance and strategic rationale of those investments,” he says.
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