Market-friendly Initiatives on corporate equity ownership. PM Najib’s abolition of FIC guidelines and other directives for GLCs, and capital raisings will mark him as one of the most market-friendly Malaysian prime ministers. We believe the changes would benefit commercial REITs, potentially raise interest in Sime and a handful of other stocks, and in the long-term, attract foreign direct investments.
The abolition of Foreign Investment Committee (FIC) rules for all corporate equity transactions and most property transactions could become a hallmark of Najib’s premiership. Foreign REIT managers would now have greater reason to enter and eventually list REITS on Bursa, while a major shareholder who had wanted to raise his shareholding may now do so more easily. Foreign ownership restrictions imposed by ministries / regulators remain in key sectors such as telecoms, water, energy, media.
GLCs to be further transformed. PM Najib has also instructed Government-linked companies (GLC) on two market-friendly moves: (i) government shareholdings in GLCs to be reduced to aid market liquidity and free-float, (ii) GLCs to dispose non-core assets. Both moves will render GLCs more attractive investments although it could initially dampen appetite for their shares. The moves would also benefit the investment banking community with more corporate deals.
Property, by comparison, was a sideshow. The FIC guideline changes to corporate equity ownership and equity raisings, and potential GLC activity, may well have a greater impact on the capital market than on physical property. In particular, individuals states may continue to impose conditions or require consent for foreign property ownership, frustrating foreign investements.
|FIC deregulation|| |
|FIC approval on acquisition of properties|| |
|Corporate equity ownership|| |
|Ownership in services industry|| |