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Timely boost for the local bourse

  • The government believes the new measure will stimulate the buying interest of investors and boost the overall market activity while promoting share circulation. Photo courtesy: Bernama

Sin Chew Daily

On Tuesday, prime minister Datuk Seri Najib Tun Razak announced several pieces of good news aimed at energizing the local capital market.

Beginning March this year, stamp duty for investing in small and medium-sized listed companies will be waived for a period of three years. These companies make up more than a third of all companies listed on Bursa Malaysia.

Currently RM1 stamp duty is imposed on every RM1,000 in share transaction, up to a maximum of RM200. The stamp duty exemption is poised to encourage investors to purchase the shares of small and medium-sized companies.

The government believes the new measure will stimulate the buying interest of investors and boost the overall market activity while promoting share circulation.

We should look into the new policy positively, but in the meantime, the effects of this measure may be limited given the fact the quantum of stamp duty involved is insignificant in the first place.

However, the measure may attract retail investors keen to invest in the market but have very limited funds. Remisers nevertheless will still remind potential investors to first inspect the fundamentals of the companies.

All these measures will be introduced with the objective of making the Malaysian equity market more attractive while encouraging new investors to participate in the market.

We need such stimulus to energize the stock market. As for companies with solid operations and businesses, they will have better chances of further development.

These aside, Najib also announced the setting up of a new interactive trading platform, the Malaysia-Singapore Connect stock exchange trading link. This platform will benefit companies listed on both the Malaysian and Singapore stock markets, and will have a tremendous positive effect on the establishment of an Asean regional trading link in future given the superior geographical location and a matured capital market in both countries.

Details of the Malaysia-Singapore Connect are yet to be unveiled and the extent of its effects is yet to be observed. However, the previously failed regional trading link should serve as a lesson.

The market is generally upbeat about the new platform, and it is hoped that it will improve on operational procedures and trading regulation in a bid to promote a more diverse and vibrant market.

 

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