Malaysia’s Securities Commission to ask listed firms for El Nino plans, eyes closer Middle East ties

[LONDON] Malaysia’s Securities Commission plans to ask companies to disclose how they are preparing for El Nino amid concerns the country’s businesses may be ill prepared for the fallout from the weather phenomenon, chairman Mohammad Faiz Azmi told Reuters.

Forecasters warn of a possible super El Nino, which can bring prolonged heat and drought across South-east Asia. Hotter, drier conditions can hit crop yields and strain water supplies, posing a particular risk to Malaysia’s key palm oil industry.

“We’re going to send a letter to all the major companies just to ask them: So actually, what is your El Nino plan?“ Mohammad Faiz told Reuters in an interview while on an investor roadshow in the UK. “And then we’ll have a chat with them next year to see whether it worked or not.”

A number of market regulators around the world have been requiring company disclosures related to climate and weather impacts for some time now, but requests concerning specific events, even if such are made, typically are not made public.

Mohammad Faiz said the initiative would test whether companies’ climate-risk disclosures translated into effective preparation, arguing many firms had not seriously considered how they would cope with drought because Malaysia had historically ample water resources.

Separately, he said the commission was exploring closer ties with regulators in the Middle East as part of efforts to deepen Islamic finance links and channel more capital flows into South-east Asia. As a first step, regulators are analysing differences in how jurisdictions classify stocks as compliant with Islamic law, or Sharia.

Malaysia’s Securities Commission also signed an agreement with Hong Kong’s Securities and Futures Commission in July that will allow companies pursuing dual listings to use a single prospectus and set of submission documents starting in September.

Mohammad Faiz said Sarawak Energy was one IPO candidate the commission was encouraging to consider such a dual listing to achieve a better valuation. He said the company could reach a valuation of around US$10 billion when it eventually comes to market. Sarawak Energy did not respond to a request for comment outside office hours.

Asked whether AirAsia was on the regulator’s surveillance watchlist, Mohammad Faiz said he could “neither confirm nor deny” that, adding the government had hired consultants to review the carrier’s finances though he was unaware of any plans for a takeover.

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AirAsia did not respond to a request for comment. AirAsia’s co-founder Tony Fernandes said on Friday (Sep 18) that there had been no discussions with the government and that it did not need any rescue or bailout.

Speaking of the stock exchange’s plans, Mohammad Faiz said the government’s plan was for Bursa Malaysia capitalisation to rise to 6.3 trillion ringgit (US$1.55 trillion) over five years from around 4.5 trillion ringgit at present. REUTERS