Contributed by Cassandra Lee
This session centred on the recent trend of Malaysian companies seeking to be listed in stock exchanges outside Malaysia and foreign companies seeking to be listed in Malaysia’s stock exchange. Cynthia Toh (a partner at Wong Beh & Toh) moderated the session and the three speakers were Selvarany Rasiah (Chief Regulatory Officer, Bursa Malaysia Berhad), Lai Voon Keat (Stephenson Harwood, Hong Kong) and Jeff Leong Pak Lim (Senior Partner of Jeff Leong, Poon & Wong).
Selvarany Rasiah was the first speaker and gave the audience Bursa Malaysia’s perspective of how attractive it is to be listed in the Malaysian stock exchange. She spoke of how the listing requirements set by Bursa Malaysia differs with the other Asian regions. Selvarany pointed out that Bursa Malaysia maintains an integrated exchange with a strong Islamic exchange. She proudly told the audience that Malaysia has been ranked 2nd among other stock exchanges for financial information disclosure by the World Economic Forum. Apart from this, Malaysia is also currently ranked 5th for commercial access to capital and 6th for financial stability by the World Economic Forum. According to Selvarany, Malaysia is also the first if not only non-developed market to be given the QDII by China. Therefore, she stressed Malaysia is an attractive option for foreign listings. She added that Bursa Malaysia prides itself as being a very transparent market.
Selvarany pointed out that given the recent global economic crisis, capital raisings on Bursa Malaysia has ironically increased. Just this year, Bursa Malaysia has been ranked 3rd among the markets in the East Asian region in terms of fund raisings in the region. She concluded that Bursa Malaysia’s framework is without a doubt comparable to the frameworks of leading exchanges in the East Asian region.
Toh said that from her personal experiences, Bursa Malaysia had been very helpful in helping foreign companies with listing issues.
Lai made an engaging argument on why it was attractive for companies, whether foreign or Malaysian, to consider being listed in stock exchanges outside Malaysia. He opined that Malaysia remained a small market when compared to markets in Hong Kong and Taiwan. Bigger companies which are not tied to a specific investor base may wish to choose to be listed in a bigger market. Other factors, according to Lai, include the perceived valuation gap in other stock exchanges, access to a deeper pool of investors and sectorial advantage.
However, Lai said that there are possible disadvantages in listing in stock exchanges outside Malaysia. Some of these disadvantages are the language and cultural barriers, costs (initial and continuing), management overheads and legal and accounting barriers.
Toh opined from what Lai said earlier that this meant that it is increasingly difficult to list a company, and (naturally) pointed out the need for a company to always consult its legal advisers on these matters.
Leong, the final speaker for the session, spoke on the key strategic considerations on deciding where to list a company. In his view, these were market valuation and price-equity multiples, political impediments and regulatory impediments (csuch as in ountry incorporation and diverse accounting rules). He also highlighted the practical issues and difficulties which may arise in a listing exercise. He spoke about due diligence and enforcement issues relating to listing. He cited examples of difficulties faced while conducting due diligence especially on Chinese companies, and cautioned great care in listing in China.
Overall, the session provided one with an overview of the key areas one should be aware of when deciding to list abroad.