Malaysian exchange to introduce environmental, social and governance index
The Malaysian bourse plans to introduce more sophisticated investment products, as it steps up efforts to lure investors to the local stock exchange.
Among the initiatives taken by Bursa Malaysia Bhd to broaden the exchange’s appeal is the establishment of a Bursa Malaysia-centric Environmental, Social and Governance (ESG) Index.
This, according to Bursa, will strengthen its position as a leading exchange in the region.
"The introduction of a Bursa Malaysia-focused ESG Index Series will provide the marketplace an enhanced advantage in Asean, especially in attracting the US$3.4- trillion socially responsible investments from around the world," Bursa chief executive officer Datuk Tajuddin Atan told a media conference at Invest Malaysia 2014.
He also announced a partnership with FTSE to implement the ESG Index, covering 14 sectors.
Under the partnership, Bursa will roll out a FTSE4Good Index series based on Bursa-listed companies designed to promote transparency and openness. It will be the first in Asia to be part of the globally benchmarked ESG Index series.
The ESG Index is targeted to be implemented by the end of this year and will form part of both the FSTE Bursa Malaysia and FSTE4Good index families. Apart from the ESG Index, Bursa has also the US dollar-dominated refined, bleached and deodorised palm olein futures contracts (FPOL) which will commence trading on Monday.
Tajuddin said the FPOL, alongside the existing crude palm oil futures contract (FCPO), would firmly place the bourse as a global marketplace for palm oil derivatives.
Bursa Malaysia Derivatives Bhd chief executive officer Chong Kim Seng said that from a trading perspective, Malaysia had traded 200 million tonnes of palm oil although its plantations only produce 90 million tonnes.
"We have built the benchmark for palm oil prices and hope to see the palm oil pricing mechanism continue to be benchmarked in Kuala Lumpur through our exchange. The FPOL definitely helps deepen the market offering to investors," he added.
Tajuddin added that the bourse was upping its investment in the youth segment. Given that Malaysia has one of the fastest growing workforce in the world, he said it was important to include youth who would drive the domestic demand in the future.
He said the local bourse was on track to becoming a developed market.
Tajuddin said 24 per cent of locally listed companies had reached a market capitalisation of over 500 million ringgit ($156.4 million), which translates to a 39-per cent growth from 2009.
"The last five years has seen Bursa Malaysia expand by 184 per cent in terms of market capitalisation, diversity and multinational growth," he said.