Proposed Singapore-Malaysia stock market trading link to be reviewed: Mahathir

PUTRAJAYA – Malaysia will review plans to set up a stock market trading link with Singapore, Prime Minister Mahathir Mohamad said on Wednesday (June 6) after a Cabinet meeting.

Plans for the link between Bursa Malaysia and Singapore Exchange were  announced by then Malaysian Prime Minister Najib Razak in February. Both countries had aimed to set up the link by the end of this year.

The link would have allowed investors in both countries to trade and settle shares listed on each other's exchanges, giving them easier and seamless access to each other's markets with a combined market capitalisation of more than US$1.2 trillion (S$1.58 trillion) and 1,600 public listed companies.

The Monetary Authority of Singapore said in response to media queries that it had asked the Securities Commission Malaysia to "clarify its position" on the matter.

Dr Mahathir's announcement came a week after he confirmed that Malaysia would scrap the Kuala Lumpur-Singapore High Speed Rail (HSR) project in order to cut its national debt. He gave no details as to why he had decided to review the proposed link between the two stock exchanges.

The trading link was initially lauded by analysts as a positive move in improving efficiency on both stock markets when it was first announced.  

Should the stock-market link not proceed as planned, retail investors would likely to be affected by more cumbersome transactions, said CIMB research analyst Ngoh Yi Sin.

“It is a loss of a cheaper and more convenient way (to have access to both markets). The link was meant to essentially take away the stock broker’s role, and remove the additional layer of fees,” said Ms Ngoh.

Nevertheless, the overall impact on the Singapore stock market (SGX) would be quite muted.

“Even though the market – or investors generally – (would) welcome the idea of a SGX-Bursa Malayisa trading link, it is unlikely to make up the core of SGX’s overall earnings in the near term,” said Ms Ngoh.

She added: “In the worst case scenario – should the link be scrapped – there are other ways that SGX can do to revive interest, for example by increasing options for better listings and encouraging more retail participation in Singapore markets.”

Dr Mahathir also announced on Wednesday the resignation of Malaysia’s central bank governor as questions swirled over the role the monetary authority played in a deal linked to scandal-plagued state fund 1MDB.

The government accepted Muhammad Ibrahim’s offer to resign, Dr Mahathir said, adding that the central banker gave no specific reason for leaving.

In a note to Bank Negara Malaysia employees, Mr Muhammad said he was "prepared to relinquish" his position to protect the central bank’s image and reputation after negative perception over a land purchase from the government and the subsequent use of proceeds from the acquisition.

"The perception is that the purchase of the land was made to intentionally aid and abet the misappropriation of public funds pertaining to the corruption and scandal surrounding 1MDB," Mr Muhammad said.

"This is totally untrue. Bank Negara Malaysia will never be party to any such activities that would betray the public trust in us."

The governor’s unexpected resignation comes less than a month after Dr Mahathir took power in a surprise election victory.

The premier has wasted no time in reopening probes into alleged embezzlement and money laundering at 1MDB and has reinstalled former investigators of the debt-ridden fund to map wrongdoing and execute a plan to retrieve lost money.

Newly appointed Attorney General Tommy Thomas said on Wednesday that investigations surrounding the 1MDB would be one of his top priorities. 

“The government’s first and immediate priority is all matters pertaining to 1MDB," he told reporters, in his first public comments after his appointment was approved by the King on Tuesday. 

“I have to study the papers in that scandal, and we shall institute criminal and civil proceedings in our courts against the alleged wrongdoers.” AGENCIES