Idea of Bursa-SGX merger 'far-fetched'

Singapore

THE possibility of a merger between Bursa Malaysia and Singapore Exchange (SGX) to create an Asian power exchange with a combined market valuation of more than US$1.5 trillion is "far-fetched" for now, Bursa's chief executive Tajuddin Atan has said.

A more realistic option would be to collaborate and share connectivity and to deepen ties among the Asean exchanges, he told Singapore reporters on Friday.

"At this point of time, as most Asean exchanges are viewed as national assets and have a certain mandate, I think it will be a little far-fetched to look at the angle of mergers and acquisitions," he said, in response to a question of whether a merger between the stock exchanges of Malaysia and Singapore was a possibility.

Mr Tajuddin said that there was already adequate infrastructure in place between the two countries in terms of connectivity, which facilitates cross-border trading, although the activity level may not be high.

"My employees are here every other month. We have a very friendly competition."

Besides, Malaysian brokers already have a big presence in Singapore and vice versa, so "connectivity is not particularly a big issue", he said.

"In terms of familiarity, the Malaysia-Singapore (connectivity) is the most natural trading environment. Trading in the shares has been going on for many years, but the question is whether or not it is seeing higher traction. It's not," he added.

On whether the "Clob stigma" was, after nearly two decades, still deterring Singapore investors from buying Malaysian shares, Mr Tajuddin said that it was not likely the case any more.

Many Singapore investors had been caught in limbo - with some suffering big losses - during the 1998 Asian crisis, when the Malaysian government, battered by a falling currency and bruised stock market, caused a huge dent to Clob International, Singapore's over-the-counter-market where local investors had actively traded Malaysian shares.

"We have gone past that. After the last two financial crises, people have moved on," he said.

And on the subject of moving on, one significant cooperation between the exchanges has resulted in the Asean Trading Link, a common trading platform involving SGX, Bursa and the Stock Exchange of Thailand, aimed at boosting cross-border stock trades and liquidity in the respective bourses.

The exchanges in Indonesia, the Philippines and Vietnam have yet to join the link. But since its roll-out in 2012, the link which offers a single, seamless way to trade shares, has drawn anaemic interest from both investors and brokers.

Mr Tajuddin said: "Trading is very, very low. It is currently trickling (in)."

He explained that the link was meant to facilitate trading of shares for small brokers and was not intended to provide a "completely new alternative to the trading approach".

"The big brokers are already connected. We wanted to encourage the smaller ones to come on board. But they are having challenges trying to get their customers to be interested in foreign stocks. It will take time to work."

For that to happen, stockbroking firms need to network, market and educate investors about the potential opportunities in the other bourses.

That also happens to be the reason for Mr Tajuddin's visit to Singapore: he is here to launch "Malaysia GEMS 2015", a cross-border investor relations roadshow to showcase Malaysian-listed firms today.

The event, which is expected to draw some 500 people, is hosted by ShareInvestor, an investor relations and share data subsidiary of Singapore Press Holdings.

"Malaysian firms have a value proposition and stories that need to be told. This event ties in with Bursa's efforts in terms of global marketing to attract interest in our stocks," he said.