S'pore, Malaysia to allow cross-border stock trading
S'pore, Malaysia to allow cross-border stock trading
Associated Press, Singapore
The stock exchanges in Malaysia and Singapore announced plans
on Friday to link their markets, letting each country trade
shares in the other.
The tie-up - which should be in place by the end of next year
- is the latest sign that improved ties between the neighbors are
helping boost business links.
Relations have been warming since last November, when Abdullah
Ahmad Badawi replaced the acerbic Mahathir Mohamad as Malaysia's
prime minister.
Abdullah has since worked hard to build ties between the two,
which were briefly united in the 1960s but split amid political
bickering and have since had an often-fractious relationship.
"We expect the linkage to contribute to greater liquidity in
our market, hence benefiting all players," said Yusli Mohamed
Yusoff, chief executive of Bursa Malaysia.
Liquidity refers to share turnover. Investors prefer more
liquid markets, in which they can buy and sell shares with
greater ease.
When the tie-up is in place, brokers in one country will be
able to directly place orders for shares in the other.
The exchanges said co-operation may in turn be extended to
include a trading link for derivatives, and the joint hosting of
technology and back-up equipment. Derivatives are complex
financial instruments.
The Singapore exchange already has a similar two-way trading
tie-up with its counterpart in Australia, which covers shares in
the largest companies. But it has not yet proved a big draw for
investors in either country.
Malaysian shares may prove more popular. Singapore investors
used to trade Malaysian equities in Singapore over a so-called
over-the-counter market known as the Central Limit Order Book, or
CLOB.
The market - which was never recognized by the Malaysian
authorities - was frozen in 1998 when Malaysia imposed capital
controls during the regional economic crisis.
The freeze was one of the many thorny issues that have soured
relations between the Southeast Asian city-state and Malaysia
when Mahathir was at the helm.
Last month, Abdullah agreed that ties were improving: "The
comfort level has gone up," he told the Far Eastern Economic
Review magazine.