Chapter 3 Bursa Malaysia BHD PDF

BURSA MALAYSIA BHD CHAPTER 3 OBJECTIVES OF THE CHAPTER : Explain on the structure of Bursa Malaysia Bhd Functions and roles of stock exchange – Primary market & Secondary market Explain the reason for listing Describe Bursa Malaysia Indices Explain factors influence stock mar...

BURSA MALAYSIA BHD CHAPTER 3 OBJECTIVES OF THE CHAPTER : Explain on the structure of Bursa Malaysia Bhd Functions and roles of stock exchange – Primary market & Secondary market Explain the reason for listing Describe Bursa Malaysia Indices Explain factors influence stock market performance Explain factors to issue initial public offering (IPO) Listing requirement of Bursa Malaysia for Main Market and ACE Market Explain on Corporate Disclosure Policy Bursa Malaysia: BURSA (KLSE) is the stock exchange of Malaysia. It is one of the largest bourses in ASEAN. It is based in Kuala Lumpur and was previously known as the Kuala Lumpur Stock Exchange. BURSA is a: - - Regulator of the Malaysian capital market - Duty to maintain a fair and orderly securities and derivatives market that are traded through its facilities. - Ensure orderly dealings in the securities deposited with Bursa Malaysia, & orderly, clear and efficient clearing and settlement arrangements for transactions cleared and settled through its facilities. - Issued various sets of rules to stipulate the requirements that need to be met by the regulated entities: listed issuers and their directors and advisers, Participating Organisations, Trading Participants, Clearing Participants, Authorised Depository Agents and Authorised Direct Members. - Administers and monitors compliance with the rules and takes strict, prompt and objective enforcement action for breaches of these rules. - actively supervises the listed issuers and the brokers & undertakes surveillance over the trading activities in the marketplace. https://www.bursamalaysia.com/regulation/structure/overview STRUCTURE OF BURSA MALAYSIA - subsidiaries - it has their functions roles - ensure the efficient 3 Stability market types of market. of securities LISTING UNDER BURSA MALAYSIA MAIN BOARD - listed for large b well establish MAIN company MARKET - e g. : Petronas , Nestle SECOND BOARD - listed technology based company companies companies. growth MESDAQ ACE MARKET - emerging MyEG Services LEAP market FTSE BURSA KLCI MALAYSIA KLCI  Market Capitalization  The total dollar market value of all of a company's outstanding shares. Market capitalization is calculated by multiplying a company's shares outstanding by the current market price of one share. The investment community uses this figure to determine a company's size, as opposed to sales or total asset figures. market stability 26 page ↑ higher the better the Frequently referred to as "market cap. 11 ROLES & FUNCTIONS OF STOCK EXCHANGE  Raising money for businesses The Stock Exchange provide companies with facility to raise capital for expansion through selling shares to the investing public (investors).  Mobilizing savings for investment People who invest their shares is leads to rational allocation resources which are mobilized and promote business activities. 6 Cont…  Facilitating company growth A takeover bid or a merger agreement through the stock market is one of the simplest and most common ways for a company to grow by acquisition.  Create investment opportunities for small investors Investing in shares is open to both the large and small stock investors because a person buys the number of shares they can afford. Therefore the Stock Exchange provides the opportunity for small investors to own shares of the same companies as large investors. 7 Cont…  Barometer of the economy At the stock exchange, share prices rise and fall depending, largely, on market forces. An economic recession, depression, or financial crisis could eventually lead to a stock market crash. Therefore, the movement of share prices and in general of the stock indexes can be an indicator of general trend in economy.  Corporate governance By having a wide and varied scope of owners, companies generally tend to improve on their management standards and efficiency in order to satisfy the demands of these shareholders and the more stringent rules for public corporations imposed by public stock exchanges and the government. 8 Reason for Listing Confidence Expansion Additional Higher Funds Profile Copyright@ Shashazrina_FPP 9 Factors to be considered to IPO Timing Corporate / Method of Capital Listing Restructuring Underwriting Pricing the Issue Copyright@ Shashazrina_FPP 10  Selection of FTSE Bursa Malaysia KLCI constituent  The FTSE Bursa Malaysia KLCI comprises the largest 30 companies listed in Main Market by full market capitalization that meet the eligibility requirements of the FTSE Bursa Malaysia Ground Rules: FREE FLOAT LIQUIDITY Copyright@ Shashazrina_FPP 13 BURSA MALAYSIA INDEX SERIES INDICES BASE YEAR FTSE Bursa Malaysia KLCI ( formerly known as 1977 KLCI) Industrial Index 1970 Sectoral Index Construction 1992 Consumer Product 1992 Finance 1970 Industrial Product 1992 Mining 1970 Plantation 1970 Property 1970 Technology 1999 Trading/Services 1992 Copyright@ Shashazrina_FPP 14 FTSE Bursa Malaysia Index Series Main Market Thematic Indices FTSE BM EMAS Syariah FTSE Bursa Index Malaysia FTSE KLCI BM FTSE BM Hijrah Syariah Top FTSE Index FTSE Bursa 100 BM EMAS FTSE BM Palm Oil Malaysia Index Index Plantation Index Mid 70 Index FTSE Bursa Malaysia FTSE Asia Pacific (ex: Japan, Small Cap Index New Zealand, Australia) FTSE Bursa Malaysia FTSE Bursa Malaysia Fledgling Index Asian Palm Oil Plantation Index (USD) ACE Market FTSE Bursa Malaysia FTSE Bursa Malaysia ACE Asian Palm Oil Index Plantation Index (MYR) Copyright@ Shashazrina_FPP 15 Tradable Indices  FTSE Bursa Malaysia KLCI Index  FTSE Bursa Malaysia Mid 70 Index  FTSE Bursa Malaysia Top 100 Index  FTSE Bursa Malaysia Hijrah Shariah Index  FTSE Bursa Malaysia Asian Palm Oil Plantation Index (USD and MYR) Copyright@ Shashazrina_FPP 16 Benchmark Indices  FTSE Bursa Malaysia EMAS Index  FTSE Bursa Malaysia Small Cap Index  FTSE Bursa Malaysia Fledging Index  FTSE Bursa Malaysia EMAS Shariah Index  FTSE Bursa Malaysia ACE Index  FTSE Bursa Malaysia Palm Oil Plantation Index Copyright@ Shashazrina_FPP 17  Factor That Influence Stock Market Performance  Economic Performance  Interest Rates  Reported Earnings  Oil Prices  Political Environment  International Environment  Entry of Institutional Investors 18 Corporate Disclosure Policy  To make available to public information necessary for informed investing.  To ensure that all who invest in its securities, enjoy equal access to such information.  It is a duty to listed company exercise the Corporate disclosure policy Copyright@ Shashazrina_FPP 19 6 Policies Policy on Immediate Public Disclosure of Material Information Policy on Insider Policy on Public Trading Dissemination 6 policies Policy on Policy on Clarification of Unwarranted Confirmation of Promotional Rumors and Disclosure Reports Policy on Response to Unusual Market Action 20  Policy on immediate public disclosure of material information  A listed company is required to make immediate public disclosure of all material information concerning its affairs, except in exceptional circumstances.  The information should be disclosed such as when company merge or joint venture, a change in management, the entry into memorandum of understanding or introduction of new product. https://www.nst.com.my/business/2022/02/769472/bursa-orders-serba-dinamik-reveal-eys-findings-update- 21  Policy on public dissemination  A listed company is required to release material information to the public in a manner designed to obtain its fullest possible public dissemination. A public disclosure of material must be made by announcement first to Exchange or simultaneously to the exchange, the press and newswire services. https://www.nst.com.my/business/2022/06/809351/khee-san-nine-directors- reprimanded-bursa 22  Policy on clarification, confirmation or denial of rumour or report  Whenever a listed company becomes aware of any rumours or report, true or false, that contains material information, a listed company must make due enquiry and immediate public clarify, confirm or deny the rumour or report. https://www.nst.com.my/business/2018/07/394718/prasarana-denies-rumours- ceos-resignation https://www.reuters.com/article/pressdigest-idUSL3E7EM00U20110322 23  Policy on response to unusual market activity  Whenever unusual market action takes place in a listed company’s securities, the company is expected to inquire into matter to determine the cause of the unusual market activities in securities.  A listed company must consider in particular whether there is any information concerning the listed company which has recently publicly disclosed or has not been publicly disclose or is the subject matter of a rumour or report. https://www.thestar.com.my/business/business-news/2010/06/30/when-stock-exchange-issues-unusual-market-activity- queries-do-you-buy-or-sell https://www.theedgemarkets.com/article/hextar-technologies-gets-second-uma-query-less-two-weeks https://www.theedgemarkets.com/article/teladan-setia-gets-uma-query-shares-hit-record-high 24  Policy on unwarranted promotional disclosure activity  A listed company should refrain from promotional disclosure activities which exceed the acceptance of public information.  Such activities include inappropriately worded, news releases, exaggerated reports or predictions and public announcements not to justify by actual developments in a company’s affairs. 25  Policy on insider trading  Insider should not trade on the basis of material information which is not known to investing to the public.  Moreover, insiders should refrain from trading even material information has been released to the press or other media for a period sufficient to permit thorough public dissemination of the information. https://www.nst.com.my/business/2022/09/828968/court-rejects-sreesanthan-eliathambys-appeal-worldwide-holdings-insider https://finance.yahoo.com/news/insider-buying-northern-star-resources-201034460.html https://www.thestar.com.my/business/business-news/2022/04/07/ex-deputy-chairman-of-patimas-computers-found-liable-for- Copyright@ Shashazrina_FPP 26  Penalties imposed by BM if listed company breach listing requirement  A public reprimand.  Suspension in the trading of the company’s securities for any period of time.  Prohibition of any sale in the company, unless the seller delivers the shares certificate together with duly executed transfer form to his broker at the time of entering into the sale contract.  Delisting the company from the official list of BURSA.  Any other penalty and/or conditions the BURSA think fit. Copyright@ Shashazrina_FPP 27 TUTORIAL  PART 1 CHAPTER 3  DEC 2019: PART A 1; PART B 3C  JUN 2019: PART B 2B,C, 3C  DEC 2018: PART B 1D  JUNE 2018: PART B 1D,  MARCH 2017: PART B 2B  MARCH 2016: PART B 1A,B  SEP 2014: PART B 1B  PART 2 CHAPTER 3  DEC 2019: PART B 2B  DEC 2018: PART B 2B,  JUNE 2018: PART B 3C,D  SEP 2014: PART B 2A