SC’s move will enable public to tap directly into market

PETALING JAYA: The Securities Commission's (SC) move to provide
retail investors with direct access to invest in bonds and sukuk is a
good move, provided there is liquidity for investors to exit.
“There
will be more products for brokers to sell and investors should enjoy
good dividend yields, especially those guaranteed by the Government.
“However, there must be liquidity for them to exit,” JF Apex Securities Bhd deputy managing director Lim Teck Seng said.
There
were several issues to be ironed out including whether existing brokers
could sell these bonds or whether they needed a separate license to do
so, Lim added.
CIMB Group deputy chief executive officer and head of corporate banking, treasury and markets Datuk Lee K. Kwan also supported the new initiative by the SC.
“The
ringgit bond markets has proven itself as a highly investible asset
class, with more than 20 years of credit default history behind it
straddling many global crisis including the 1997/98 Asian crisis and
the current European sovereign crisis in 2012,” Lee said.
Lee
said as Malaysia was a very high-savings nation where the savings rate
was more than 32% of gross domestic product, it was good to widen the
range of investible assets for retail investors beyond fixed deposits,
equity and property.
“The ability to invest in longer tenure
fixed-rate securities caters much better to the longer-term financial
planning requirements of individuals.
“We are very supportive of
the gradual approach taken by the SC as bonds are relatively new to
retail investors even though it is now a very mature market for both
institutional investors and corporates across Malaysia,” Lee added.
HSBC Amanah Malaysia Berhad chief executive officer Rafe Haneef said this was an important milestone that would hopefully lead to greater democratisation of wealth in Malaysia.
“Now
retail customers can invest in the sukuk market and have a share of the
sukuk pie. We would like to compliment SC for their great efforts in
establishing this framework.
“Corporates should not look at it
as a hassle. If you can get a broader distribution from retail, you can
basically access a new set of investors. This framework reduces the
hassle as it comes up with a simplified prospectus,” he said.
The feedback from the man-in-the-street also appears positive.
A 60-year-old retiree who invests regularly in the market said he welcomed the move by the SC.
“Right now, I am buying blue chips like Sime Darby Bhd
and Bursa Malaysia Bhd for their stability. I would definitely consider
bonds as I want something stable and recurring. I cannot really take
the volatility in the market anymore,” said the retiree.
However, he said the bonds must give reasonable returns to investors.
“It
will depend on the returns and minimum capital I am allowed to put in
for the bond. If the minimum capital is about RM100,000, then I would
definitely be interested.
“Returns cannot just be slightly above
fixed-deposit rates. It should at least allow investors to fight
inflation. A return of 6% to 8% would be reasonable,” said the retiree.
From
a potential bond issuer's point of view, a managing director of a
public-listed company said he would not be “very interested” to issue
bonds to retailers.
“Even to manage my company's shares on Bursa
Malaysia, it is already such a headache. As it is, our market is
already quite illiquid. So what more raising bonds. No thanks,” he said.