MALAYSIA CAPITAL MARKET The Investment Destination Bursa Malaysia 19 October 2012
TABLE OF CONTENTS 1. Market Overview 2. Outlook & Opportunities 3. Development & Strategy 4. Conclusion 2
Market Overview We remain accessible 3
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 We Have Grown Since The 1997 Financial Crisis 376 375 Market Capitalisation (RM bil) 1,275 1,285 1,106 999 849 722 695 640 664 553 444 465 482 1,647 468 Average Daily Value (RM mil) 2,179 1,699 1,454 1,181 1,129 1,019 911 747 748 874 718 350 472 Malaysian equities market has shown tremendous growth over the past 15 years, reflecting its resilience and tenacity throughout the various global and financial crisis. Market Capitalisation has tripled since 1997 In 2011, our ADV has recovered to pre-crisis level. Average Daily Contracts (Derivatives) 10,617 9,958 4,673 8,131 3,386 3,805 5,192 3,446 2,954 24,878 25,011 24,749 24,818 16,915 34,474 17,345 17,393 18,802 23,488 9,339 Open Interests (Derivatives) 44,739 49,296 65,824 84,848 159,019 125,051 155,560 132,151 123,141 152,419 Likewise, our derivatives market has also grown exponentially since the financial crisis. Average daily contract traded has grown by more than 9-fold in 15 years. Open interest has grown by 779% to 152,419 contracts in 2011 compared to 17,345 contracts in 1997. 4
Securities Market Trading Participation Retail vs Institutions Foreign vs Local 806 806 346 283 369 392 442 389 357 496 323 392 437 405 34 37 24 33 27 26 24 35 37 42 27 27 26 25 66 63 76 67 73 74 76 65 63 58 73 73 74 75 2006 2007 2008 2009 2010 2011 9M 2012 2006 2007 2008 2009 2010 2011 9M 2012 Retail ADV Traded (RM mil) Retail (%) Institutions (%) Foreign ADV Traded (RM mil) Foreign (%) Local (%) From 2006 to 2009, the statistics were based on Brokers submission. From 2010 onwards statistics were based on Bursa s internal system. 5
20.4 20.6 20.8 21.8 21.9 22.0 21.7 22.1 22.2 22.7 22.4 23.0 23.3 23.5 23.6 Securities Market Foreign Ownership Based on Market Capitalisation (as at month end) (%) Foreign Ownership by Nationality (%) 24.6 Singapore Hong Kong UK 6.5 1.9 2.6 USA 0.1 75.4 Mid-East 0.2 Others 12.0 Foreign Nominees 6
20% 80% 24% 76% Derivatives Market Activity Quarterly (Average Daily Contracts 000 ) Total Annual Contract (Million) 117 142 123 129 115 114 132 136 162 37 171 152 174 146 172 40 42 66 85 159 125 6.2 156 123 6.1 6.1 132 6.2 152 8.4 172 7.0 29 24 22 24 23 25 28 32 34 35 31 4.2 2.6 2.5 ` ` Open Interest (000 ) Crude Palm Oil Futures Open Interest (000 ) Crude Palm Oil Futures Others FMBKLCI Futures Others 7 FBMKLCI Futures 7
Derivatives Market Demography (%) FKLI (%) FCPO 14 3 45 23 6 48 31 37 40 5 3 3 45 43 40 37 45 42 2 2 2 40 41 46 26 33 3 2 52 44 37 2 42 53 2 28 14 14 17 20 18 16 18 20 19 21 18 15 17 27 20 22 25 22 6 4 1 4 3 2 1 1 15 21 26 24 23 27 27 34 38 25 28 30 15 13 9 1 1 26 24 22 31 19 14 16 16 13 15 15 20 21 19 17 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 June - Sept 2012 40 38 35 33 35 31 25 27 36 34 34 38 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 June - Sept 2012 Foreign Institutions Domestic Retail Foreign Institutions Foreign Retail Local Domestic Institutions Local Domestic Institutions Domestic Retail * Local - A local participant is an individual who has been admitted as a participant in accordance with The Rules, registered with SC and has the right to trade for himself - all futures contracts listed on the Derivatives Exchange. 8
Bursa Malaysia Snapshot Resilience in equities market during current financial crisis engulfs Europe and America. 88% of PLCs qualified the ethical screening i.e. shariah compliant Strong leadership Attractive destination for fund raising. Unique niche product Islamic market and triple screening Islamic indices 9
1818 10
Bursa Malaysia s Dividends Surpassing 75% payout policy, giving 4.3% dividend yield to shareholders Payout 95% 13.0 Payout 93% Payout 94% 10.5 9.0 5.0 9.5 Payout 91% 13.0 13.5 Final Dividend (Single Tier) in sen Interim Dividend (Single Tier) in sen Interim Dividend, Net (Franked) in sen 3.8 2009 2010 2011 2012 11
Outlook & Opportunities We believe in being responsible 12
Our Capital Market WHAT WE REPRESENT 931 PLCs RM1.4 trillion market cap WHO WE IMPACT 1.1 million directly employed 5.5 million indirectly employed ~ 50% of our Malaysia s workforce 13
Our Building Blocks E m b r a c i n g b e s t p r a c t i c e s a n d r e s p o n s i v e t o r e g i o n a l / g l o b a l d e v e l o p m e n t i n c r e a t i n g a v i b r a n t, f a i r a n d o r d e r l y m a r k e t MAIN STAKEHOLDERS INVESTORS REGULATORS SHARE- HOLDERS ISSUERS GUIDING PRINCIPLES CMP2 NEM & ETP FINANCIAL SECTOR BLUEPRINT 2011-20 BURSA S STRATEGIC GOALS & TARGETS OBJECTIVES B U I L D I N G A C O M P E T I T I V E M A R K E T P L A C E CMP2 : Capital Market Master Plan 2 NEM : New Economic Model ETP : Economic Transformation Programme 14
Internationally benchmarked Improved Country Ranking & Standard World Bank World Economic Forum Asian Sustainability Rating FTSE s Index 4 th amongst 183 Countries For Investor Protection 4th amongst 142 Countries for Strength of Investor Protection and ranked 9th for Efficacy of Corporate Boards 3 rd amongst 10 Most Developed Asian Countries to provide Companies' Strategic Sustainability View to Stakeholders Elevation to Advanced Emerging market status in FTSE s Index CFTC CFTC allows US clients to buy or sell FKLI CBRC QDII Malaysia Investment destination for China investors US SEC IR Global Ranking Designated Offshore Securities Market recognition to ease trading in Malaysian listed securities & shelf listed bonds by U.S. investors Outstanding Corporate Governance in Asia-Pacific Best Online Annual Report in Asia-Pacific Investor Relations Website in Asia-Pacific - Bronze Award Best Ranked Corporate Governance by Industry (Financials) 15
Centre Of The ASEAN Marketplace Growth: Asia / ASEAN to outperform advanced economies amid resilience from strong fundamentals and internal demand. Malaysia to benefit from unique domestic driver i.e. ETP projects & investments. Market: Malaysia is a destination for funds seeking exposure to the agriculture & resource sectors, especially plantations, oil & gas. Favourable demographics i.e. young population and a relatively skilled and well-trained labor force Policies: Policies, objectives are well communicated and will help strengthen mandate. If successful, perceived policy risks in Malaysia will fall. Flexibility and soundness in macroeconomic policies e.g. public sector expenditure & investment 16
We are a progressive Exchange DEVELOPMENT & STRATEGY 17
Malaysia Hong Kong Australia Singapor e Korea Indonesia Philippine Thailand Remaining Attractive Strong IPO activities with large listings 8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0 (USD 7.3 bil) RM22.3 bil Fund raised (USD bil) from IPO s YTD September 2012 Felda GV raised RM9.9 bil IHH raised RM5 bil Source: WFE 18
ม.ย.-11 ก.ค.-11 ส.ค.-11 ก.ย.-11 ต.ค.-11 พ.ย.-11 ธ.ค.-11 ม.ค.-12 ก.พ.-12 ม.ค.-12 เม.ย.-12 พ.ค.-12 ม.ย.-12 ก.ค.-12 ส.ค.-12 ก.ย.-12 Positive Foreign Inflows Foreign investors were net buyers for the last 14 months out of 16 months 5 (RM bil) 4 3 2 1 0-1 -2-3 -4-5 Local Net Purchases/Sales Foreign Net Purchases/Sales 19
Corporate Governance Higher ACGA Ranking CG Rating ByAsia Corporate Governance Association Malaysia has significantly improved its ranking from 6th to 4th place out of 11 countries in Asia. Bursa Malaysia as a listed company is included in the list of "Top 50 CG ranking of mid/small caps in Asia Pacific (< US 10b market cap) Comments from the report on Malaysia includes: Significant progress on our PLCs CG Culture companies taking more interest in improving CG practices; Has consistently increased in CG scores; Have well-established eco-systems supporting director training and board development - far more advanced and/or independent than China, Japan, Korea or Taiwan; 20
Prospects and Targets Securities Market We remain confident of the country's economic prospects and business fundamentals despite the increasing challenging external environment. Malaysia has remained resilient in the global financial crisis, supported by the various Government stimulus measures. Budget 2013 will continue to sustain country's domestic demand and economic growth, and is supportive of the capital market growth. The announcement of incentives for ETBS will further stimulate trading and creating greater liquidity for these new products. New business trust structure will add to the diversity of product offerings. 21
Prospects and Targets (cont d) Derivatives Market Continue our efforts to widen our distribution channels and educate the domestic marketplace. Global outreach to expand visibility and accessibility of the Malaysian derivatives market in the international marketplace. Expected to continue to benefit from the volatility and uncertainty seen in global commodities and securities markets for the balance of the year. Targets Looking at our goal, it will be a challenge to achieve all the mid-term targets of Bursa. Nevertheless, we will continue to build our competitiveness and address the needs of our capital market to ensure its growth, vibrancy and resilience in the face of increasing competition. 22
Conclusion We continue to innovate 23
Ample Investment Drivers OUR ASSET PEOPLE MARKET FRAMEWORK LOCATION 1) YOUNG & DYNAMIC: 4) GOOD INFRASTRUCTURE: 7) ROUTE INTO ASEAN: With a population of 28 mil, Malaysia s labor force stands high at 64%. Only 5% of population is above age 65. Open access & business friendly. Further strengthen by Government initiatives like ETP Malaysia is situated at the heart of ASEAN s 590 million people Our Strengths 2) CULTURE & TIES : Ties with East Asia, India, Indonesia and the developed world 5) CORPORATE GOVERNANCE: Regulatory focus on CG practice, transparency & investor protection 8) RICH NATURAL RESOURCES: Oil & gas, palm oil, ample land 3) UNTAPPED LIQUIDITY : 6) EXPANDING CAPITAL MARKET: 9) QUALITY PLCs: Ample liquidity in the financial system QDII, US SEC Recognition, FTSE Advance Emerging Market status, CFTC Approval Home to regional Champions (Finance, Telcos, Plantation etc ) Malaysian macro economic outlook is strong, with 5.1% growth last year and estimated 4%-5% for 2012 24
Sound Macro Environment Bursa a proxy to the Economy Commendable GDP Growth Projected 4% - 5% for 2012F Healthy International Reserves USD 138 billion @ 28 th September 2012 Strong Current Account In The Region > 90% of assets are RM denominated Non-performing loan at 1.8% @ end Apr 2012 Conducive Domestic Interest Rate Overnight Policy rate : 3.0% Manageable Inflation Modest 2.5% - 3.0% for 2012F Strong Banking Sector & Ample Liquidity 2012F at RM 109.5 billion Source: BNM 25
Watch this space We remain focused To address competition and eliminate market friction To be a competitive marketplace To shape Bursa Malaysia as a high performance organisation We are stepping up our game Implementation of initiatives aligned under the 4 strategic intents driven by our Business Transformation Programme will spur growth in the capital market 26
Thank You