BURSA MALAYSIA BERHAD Meeting with Korea Investment Holding Dato Yusli Mohamed Yusoff, CEO 17 June 2008 Visit us at http://www.bursamalaysia.com Bursa Malaysia and its Group of Companies ( the Company ) reserve all proprietary rights to the contents of this Presentation. No part of this Presentation may be used or reproduced in any form without the Company s prior written permission. This Presentation is provided for information purposes only. Neither the Company nor the Presenter make any warranty, express or implied, nor assume any legal liability or responsibility for the accuracy, completeness or currency of the contents of this Presentation. It is your responsibility to verify any information before using or relying on it.
Our Transformation... Before 2001- Separate exchanges KLSE, KLOFFE, COMMEX, MESDAQ 2001 - Consolidation of derivatives exchanges completed (KLOFFE + COMMEX = MDEX) 2002 - Consolidation of stock exchanges completed (MESDAQ merged with KLSE) 2004 - KLSE become a public company limited by shares - Bursa Malaysia 2005 - Listed on 18 March 2005 KLSE: Kuala Lumpur Stock Exchange KLOFFE: Kuala Lumpur Options & Financial Futures Exchange MESDAQ: Malaysian Exchange of Securities Dealing & Automated Quotation COMMEX: Commodity & Monetary Exchange 2
SINGLE EXCHANGE GROUP Total Market Capitalisation : USD284 Bil (RM930 Bil) @ 12 th June 2008 Equities Market Derivatives Market Bond Market Offshore Market 3 Markets: 9 Derivatives Products: 5 Bond Instruments: Financial instruments: Main Board : 663 cos Second Board : 223 cos MESDAQ Market : 125 cos Commodity futures Equity futures & options Financial futures M sia Gov Securities* Gov Islamic Instruments* Central Bank Papers Cagamas Papers Private Debt Securities Non-ringgit securities Islamic Sukuk cross listings Trading Clearing Settlement Depository Trading Clearing Settlement Order Matching* (Trading) Negotiation Reporting Listing Clearing Depository Clearing & Depository by : Citibank & Deutsche Integration Across Products and Services 3
Regulatory Framework Minister of Finance Central Bank Securities Commission (SC) Labuan Offshore Financial Services Authority (LOFSA) Bursa Malaysia Berhad Labuan International Financial Exchange 4
SENIOR MANAGEMENT AND SHAREHOLDINGS STRUCTURE 6 Management Committees 10 Board Members @ 16/6/2008 Dato Yusli Mohamed Yusoff, CEO Devanesan Evanson, CMO Selvarany Rasiah, CRO 1 Executive Director 6 Independent Directors 3 Public Interest Directors (also independent) Substantial Shareholders @ 30/5/2008 Minister of Finance 19% Capital Market Development Fund Newton 19% 9.5% Omar Merican, COO Nadzirah Abdul Rashid, CFO Yew Kim Keong, CIO Foreign Shareholding : 26% 5
Market Valuation (RMb) Market Valuation & Listed Companies 736 758 375 553 BOTH CONVENTIONAL & SHARIAH COMPLIANT 798 816 865 444 465 482 Market Valuation 906 640 963 722 1021 695 1027 849 987 1106 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 YTD 12 June 08 Total Listed Companies 984 930 Number of Companies Shariah Compliant Non- Shariah Compliant 86% 843 Shariah Compliant Companies ; 86% (Mkt Cap USD194B) Source : ISBU As at 12/6/2008 Main Board Second Board Mesdaq Call Warrants 115 135 283 811 1% 1% 1% Main Board 97% Second Board Mesdaq 97% Call Warrants No. of Counters Listed 1,344 Market Capitalisation USD284 BIL (RM930 bil) 6
DIVERSITY PROVIDES RESILIENCE As at 30 May 2008 Number of Listed Companies 1% 5% 21% 13% Market Capitalisation of KLCI Components 4% 4% 7% 4% 37% 18% 11% 10% 9% 5% 1% 30% 1% 4% 11% 4% Construction Consumer Finance Industrial Infrastructure Plantation Property Technology Trading/Services Others 7
BURSA S STRONG NICHE IN ISLAMIC CAPITAL MARKET 1 Brand Malaysia as leading centre in Islamic banking 11 standalone Islamic Banks, of which 3 are foreign Pioneer in Islamic finance Islamic friendly Highly regarded by Islamic investors, with Middle Eastern liquidity favoring Malaysia over other developed markets 2 Islamic finance experts within Bursa Malaysia Access to Shariah Advisory Council (SAC) Close collaboration with Securities Commission on ICM 1 transaction and activities Islamic Financial Services Board (IFSB), international standard-setting organisation for Expertise the Islamic financial services industry International Centre for Education in Islamic Finance established to develop the global Islamic finance industry s human capital Involvement of leading Islamic finance academics and industry experts as advisors to capital markets players such as Bursa Malaysia 3 Most established Shariah-compliant legal and regulatory framework Tax exemptions for Islamic intermediaries Asset managers, banking products and Takaful companies Infrastructure LFX as offshore platform with significant Islamic finance activity Significant Sukuk activity Potential offshore listing destination for Islamic finance products, with access to broad pool of investors 1. Islamic Capital Markets 8
EFFICIENT REGULATORY FRAMEWORK Stimulating Growth of Sukuk Issuance 31% 55% 45% 2006 2007 69% Malaysia Middle East/GCC In 2007, Malaysia has the world s largest sukuk market of 69% or US$62 billion (RM198.4 billion) of the total issuance of corporate sukuk Source : Bank Negara and The Islamic Capital Market Task Force (IOSCO) 9
OFFERS THE HIGHEST DIVIDEND YIELD Selected Regional Markets - Dividend Yield Malaysia (KLCI) Philippines (PCOMP) 4.69% 4.56% Australia (AS30) Singapore (FSSTI) Thailand (SET) Taiwan (TWSE) 4.20% 3.92% 3.63% 3.54% Hong Kong (HSI) 2.75% Indonesia (JCI) 2.32% South Korea (Kospi) 1.62% China (SHASHR) 0.77% Source: Bloomberg Dividend yield for main regional indices as at 30 th May 2008 10
ATTRACTIVE MARKET P/E VALUATION 14.2 16.1 15.4 14.7 15.1 11.6 12.5 12.5 14.8 13.4 13.2 13.7 14.7 14.7 13.0 11.3 Hong Kong Indonesia Singapore Philippines Taiwan Malaysia South Korea Thailand P/E Forward P/E Source: Bloomberg - P/E Valuation for main regional indices as at 30 May 2008 11
SIGNIFICANT FOREIGN INVESTORS ACTIVITY REFLECTS MARKET RESILIENCE Breakdown of trading (by value) 1993 to May 2008 85% 82% 69% 81% 76% 73% 83% 78% 71% 68% 76% 69% 63% 65% 63% 58% 15% 18% 31% 19% 24% 27% 17% 22% 29% 32% 24% 31% 37% 35% 37% 42% 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 YTD May 08 Local Investors Foreign Investors 12
RETAIL PARTICIPATION Drop in retail volume due to weak investors sentiment Breakdown of trading (by value) 1993 to May 2008 42% 45% 44% 54% 44% 49% 59% 54% 43% 40% 50% 43% 29% 34% 37% 24% 51% 48% 45% 36% 42% 43% 35% 40% 51% 54% 45% 53% 71% 66% 63% 76% 7% 7% 11% 10% 14% 8% 6% 6% 6% 6% 5% 3% 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 YTD May 08 Retail Institutions Others Others - refers to trades conducted for accounts not belonging to individuals/ institutions. Definitions of investors type clarified in 2004, hence reducing the type of investor falling under others category. 13
1 Foreigners Malaysian and Foreign Shareholdings as at 31 st May 2008 Items FOREIGN OWNERSHIP HIGH AT 25.4% Total Shareholdings (Units-Billion) April 2008 Note : Foreign Nominees reflect shares owned by foreigners but held via Authorised Nominee Companies incorporated in Malaysia. % Total Market Value (RM-Billion) Direct Holdings 17.3 4.22 44.2 4.56 Foreign Nominees* 56.6 13.82 202.1 20.87 2 Malaysians 335.7 81.96 722.1 74.57 3 Total securities immobilised in CDS 409.6 100.00 968.4 100.00 Foreign Shareholdings by Nationality for Selected Countries as at 31 st May 2008 United Kingdom 1.22% Singapore 8.39% Hong Kong 1.35% United States of Americas 0.41% Mid-East 0.13% Others 11. 91% % Foreign Nominees 76.59% 14
QUARTERLY DERIVATIVES ACTIVITY Record Daily Volume FKLI : 51,210 contracts on 26 March 08 FCPO : 37,231 contracts on 13 June 07 Total : 73,230 contracts on 26 March 08 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 105,500 11,703 128,000 14,500 162,628 159,019 158,737 161,544 19,104 22,113 26,035 27,099 145,107 24,797 125,051 22,151 138,648 30,283 128,842 Q106 Q206 Q306 Q406 Q107 Q207 Q307 Q407 Q108 April - 12 June 08 Daily Average Volume Open Position 20,285 180,000 160,000 140,000 120,000 100,000 80,000 60,000 40,000 20,000 0 15
2 LEADING DERIVATIVES PRODUCTS 7% 4% 54% 39% 45% 51% Total contracts traded FY 2006 = 4.1 million Total contracts traded FY 2007 = 6.2 million 50% 3% 2% 40% 57% 47% 51% Total contracts traded Q1 2007 = 1.6 million Total contracts traded Q1 2008 = 1.8 million 13% Crude Palm Oil Futures (FCPO) 25% in 2007 KL Composite Index Futures (FKLI) 94% in 2007 3-Month Kuala Lumpur Interbank Offered Rate Futures (FKB3) 16
DERIVATIVES MARKET DEMOGRAPHY FKLI 14% 3% 45% 23% 6% 48% KLCI Futures 31% 37% 40% 45% 42% 39% 5% 3% 3% 2% 1% 2% 45% 43% 40% 40% 41% 43% 31% 19% 14% 16% 16% 13% 15% 17% 2001 2002 2003 2004 2005 2006 2007 YTD April 08 Locals Domestic Retail Domestic Institutions Foreign Institutions * Local - A local participant is an individual who owns a seat in the Exchange, registered with SC and is allowed to trade all futures contracts listed on the Derivatives Exchange for his or her own account. 17
DERIVATIVES MARKET DEMOGRAPHY FCPO Crude Palm Oil Futures 14% 14% 17% 20% 18% 16% 18% 21% 27% 21% 18% 20% 22% 25% 22% 14% 15% 21% 26% 24% 23% 27% 34% 37% 40% 38% 35% 33% 35% 31% 25% 27% 2001 2002 2003 2004 2005 2006 2007 YTD April 08 Locals Domestic Retail Domestic Institutions Foreign Institutions * Local - A local participant is an individual who owns a seat in the Exchange, registered with SC and is allowed to trade all futures contracts listed on the Derivatives Exchange for his or her own account. 18
LIBERALISATION EFFORTS NO CAPITAL CONTROL Re-introduction of regulated short selling (RSS) and stock borrowing & lending (SBL) No Capital Gains Tax No Property Gains Tax Admission of 5 foreign brokers (UBS, CLSA, CSFB, Macquarie, JP Morgan) Admission of 5 foreign fund managers (Aberdeen, Nomura, BNP Paribas, Credit Agricole, Franklin Templeton Investments) Accelerate tax restructuring : Reits (15% local, 20% foreign) : Corporate tax (25% - 2009, 26% - 2008) Liberalisation of Foreign Listing & Dual Listing 19
PROGRESSIVE BUDGETARY MEASURES LOWER CORPORATE TAXES & SINGLE TIER TAX SYSTEM To deliver attractive earnings ratio and improve the investability ENCOURAGE INTERNET-BASED INVESTING Fully negotiable commission rate ATTRACTING MIDDLE EAST FUND 3 new stockbroking licenses Tax incentives for Islamic stockbroking STIMULANT FOR PROPERTY SECTOR Monthly withdrawal from EPF for mortgage repayment 50% stamp duty exemption for house less than RM250,000 A BOOST TO FUND MANAGEMENT INDUSTRY Foreign ownership will be allowed up to 70% Tax exemption on Islamic fund management fees activities till 2016 20
Infrastructure Products Regulatory PLCs ENHANCING MARKET ATTRACTIVENESS BROADENING MARKET ACCESS RSS/SBL Financial Market Trading Platform : Fixed Income Direct Market Access : Derivatives Bursa Trade Securities Complete launch of new FBM Index Series FTSE Bursa Malaysia 30 ETF Dow Jones Islamic Market Malaysia Titans 25 ETF or MyETF Revised listing fees Dealers representatives mobility Reduced trading fees for derivatives contracts Revised clearing fees CMDF Bursa Research Scheme IR Incentive Programme Malaysia Investor Relations Association (MIRA) ` Cross border listings framework Unification of 2 Boards 21
EXCHANGE S TARGETS Bursa s KPI 2008 Target 1Q08 i Velocity 56% 46% Growth in derivatives contracts traded 50% 13% Growth in Velocity to be driven by : Improvement of Infrastructure Bursa Trade Securities & DMA Equities Introduction of More Products ETF, Reits & Warrants Other Initiative Retail Plan Market Making Growth in Daily Average Contracts to be driven by: Improvement of Infrastructure DMA Derivatives Introduction of New Product FUPO Other Initiative Market Making 22
Hong Kong Exchanges & Clearing Sharing market surveillance information Dalian Commodities Exchange Joint organizing of China International Oil and Oilseeds Conference. GLOBAL NETWORK Ho Chi Minh City & Hanoi Securities Trading Centre Facilitating communication channels and fostering relations Korea Exchange Development of Financial Market Trading Platform for the bond market in Bursa Malaysia NYSE Euronext Technology Solutions Provider for equities, derivatives & DMA platform: Through NYX Advanced Trading Solutions Dubai Gold & Commodities Exchange Development of derivatives markets PT. Bursa Berjangka Jakarta Development of futures and commodities markets Australian Securities Exchange Facilitating communication channels and fostering relations The Agricultural Futures Exchange of Thailand Development of commodities and futures markets Multi Commodity Exchange of India Limited Development of commodities market and for cross listing of products Singapore Exchange Derivatives Trading Limited Exploring future business relationship opportunities Tokyo Stock Exchange Providing mutual cooperation on personnel training & information exchange 23
THANK YOU Q&A 24