MBF1223 Financial Management Prepared by Dr Khairul Anuar

Transcription

1 MBF1223 Financial Management Prepared by Dr Khairul Anuar L2 The Securities Market

2 Can Facebook Fire Mark Zukerberg? The amount of equity one holds in a company has nothing to do with being possible to get fired as a CEO. But it does help. Facebook has two classes of stock: Class A shares that carry one vote apiece (the same shares you can buy on the stock exchange), and Class B shares that carry 10 votes per share. Zuckerberg has a big percentage of Class B shares and, as a result, controls roughly 60% of the voting power at the company. According to SEC Filling: Zuckerberg owns 29.3% of Facebook s Class A shares, but only around 20% of the company as a whole. That makes this stake worth closer to $13.6 billion rather than $18 billion. In addition to that, Zuckerberg owns other types of shares, harder to track. So his total stake is worth more than that. 2

3 1. Securities Market The securities market is the market for equity, debt, derivatives, and hybrid. The debt market, in turn, may be divided into three parts, viz., the government securities market, the corporate debt market, and the money market. The derivatives market may divided into two parts, viz., the option market and the futures market.

4 4. Types of Financial Market The financial market may be classified as primary market or secondary market. Primary Market: The market mechanism for the buying and selling of new issues of securities is known as primary market. This market is also termed as new issues market because it deals in new issues of securities.

5 4. Types of Financial Market Secondary Market: It deals with securities which have already been issued and are owned by investors, both individual and institutional. These may be traded between investors. The buying and selling of securities already issued and outstanding take place in stock exchanges. Stock exchanges constitute the secondary market in securities.

6 5. Participants in the Financial Market The major participants are the buyers and sellers of securities or the investors and the issuers. Financial intermediaries are the second major class of participants in the financial system. There are two types of financial intermediaries in the financial system, namely banking financial intermediaries; and non-banking financial intermediaries such as insurance companies, housing finance companies, unit trusts and investment companies.

7 5. Participants in the Financial Market Another group of participants in the financial system comprises the individuals and institutions who facilitate the trading or exchange process in the system.

8 5. Participants in the Financial Market Stock Exchanges: A stock exchange is an institution where securities that have already been issued are bought and sold. The Malaysian stock exchange is called Bursa Malaysia. Listed Securities: Securities that are listed on various stock exchanges and hence eligible for being traded there are called listed securities. Presently about 1,000 securities are listed on Bursa Malaysia.

9 6. What are securities? What are securities? Definition: a legal representation of the right to receive prospective future benefits under stated conditions. 9

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13 7. The Malaysian Stock Market The Malaysian stock market is known as Bursa Malaysia Presently, 925 companies listed on Bursa Malaysia, represents RM1.47 trillion of market capitalisation Bursa Malaysia comprises 3 markets: Main Market ACE Market LEAP Market 13

14 8. Recent Notable 14

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16 Total Funds Raised in $2,164 million 16

17 IPOs in Regional Markets in

18 9. The 2 Markets on Bursa Malaysia Bursa Malaysia Main Market ACE Market For established companies with a profit track record of 3 to 5 full financial years or companies with a sizeable business An alternative sponsor-driven market designed for companies of all business sectors that have excellent growth potential 18

19 10. Criteria for Listing on Bursa Malaysia Criteria for Listing Quantitative Operating track record Profit requirement Market capitalization Qualitative Sustainable business Business prospects Quality of management & directors Stage of development Risk management Corporate governance 19

20 11. Quantitative Criteria for Listing Quantitative Criteria Main Market Uninterrupted PAT of 3-5 FY, with aggregate of at least RM20m PAT of at least RM6m for the most recent full FY ACE No minimum operating track record or profit requirement Market capitalization of at least RM500m upon listing 20

21 12. Qualitative Criteria for Main Market Identifiable Core Business Good Management No Conflicts of Interest Strong Business Prospects Healthy Financial Position Good Corporate Governance 21

22 12. Qualitative Criteria for ACE Market Growth Prospects Capable Directors and Management Commitment to Compliance Responsible Directors Risk Management Good Corporate Governance 22

23 12. LEAP Market LEAP Market is an alternative market for SMEs and companies to raise funds. It brings together potential SMEs and companies, intermediaries and qualified sophisticated investors onto a single platform to create a conducive marketplace for fund raising. 23

24 12. LEAP Market LEAP Market is a new market offered by Bursa Malaysia which aims to: provide SMEs and other companies with greater fund raising access and visibility via the capital market; and be accessible only to sophisticated investors * * as prescribed under the Capital Markets and Services Act 2007 The LEAP Market aims to bring together potential issuers, intermediaries and Sophisticated Investors onto a new platform to create a conducive marketplace for fund raising. The LEAP Market provides an efficient and transparent capital formation and price discovery mechanisms compared to private market. Sophisticated Investors can now have greater opportunities to participate in the growth of SMEs in Malaysia. The establishment of the LEAP Market is premised on the following key guiding principles: Cost-efficient fund raising & listing Appropriate rules and regulation based on intended SMEs and companies Qualified Market for Sophisticated Investors 24

25 12. LEAP Market 25

26 Listing on the Singapore Stock Exchange: Mainboard vs. Catalist Quantitative requirements An applicant to a Mainboard listing needs to satisfy at least one of the following quantitative requirements: (a) PAT of at least S$30 million for the latest financial year, and an operating track record of at least three years; (b) profitable in the latest financial year, have an operating track record of at least three years, and have a market capitalisation at initial public offering ( IPO ) of not less than S$150 million; or (c) generated operating revenue in the latest completed financial year, and have a market capitalisation at IPO of not less than S$300 million. A Catalist listing does not have quantitative requirements but needs to 26 appoint a sponsor, who will assess its suitability to list and will advise

27 Operating track record A Mainboard listing applicant would require a three-year operating track record, unless the listing is based on market capitalisation of not less than S$300 million. A Catalist Listing does not have such a requirement. 27

28 12. Qualitative Criteria for LSE Aim and Main Market 28

29 13. Ten largest stock exchanges in the world by market capitalization in 2011: 1. New York Stock Exchange (NYSE) - Headquartered in New York City. Market Capitalization (2011, USD Billions) 14,242; Trade Value (2011, USD Billions) 20, NASDAQ OMX - Headquartered in New York City. Market Capitalization (2011, USD Billions) - 4,687; Trade Value (2011, USD Billions) 13, Tokyo Stock Exchange - Headquartered in Tokyo. Market Capitalization (2011, USD Billions) 3,325; Trade Value (2011, USD Billions) 3, London Stock Exchange - Headquartered in London. Market Capitalization (2011, USD Billions) 3,266; Trade Value (2011, USD Billions) 2, Shanghai Stock Exchange - Headquartered in Shanghai. Market Capitalization (2011, USD Billions) 2,357; Trade Value (2011, USD Billions) 3,

30 13. Ten largest stock exchanges in the world by market capitalization in 2011: 6. Hong Kong Stock Exchange - Headquartered in Hong Kong. Market Capitalization (2011, USD Billions) 2,258; Trade Value (2011, USD Billions) 1, Toronto Stock Exchange - Headquartered in Toronto. Market Capitalization (2011, USD Billions) 1,912; Trade Value (2011, USD Billions) 1, BM&F Bovespa - Headquartered in Sao Paulo. Market Capitalization (2011, USD Billions) 1,229; Trade Value (2011, USD Billions) Australian Securities Exchange - Headquartered in Sydney. Market Capitalization (2011, USD Billions) 1,198; Trade Value (2011, USD Billions) 1, Deutsche Börse - Headquartered in Frankfurt. Market Capitalization (2011, USD Billions) 1,185; Trade Value (2011, USD Billions) 1,