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Bursa Malaysia and its Group of Companies (“the Company”) reserve all proprietary rights to the contents of this Presentation. No part of this Presentation may be used or reproduced in any form without the Company’s prior written permission.
This Presentation is provided for information purposes only. Neither the Company nor the Presenter make any warranty, express or implied, nor assume any legal liability or responsibility for the accuracy, completeness or currency of the contents of this Presentation.
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BURSA MALAYSIA BERHADMeeting with Korea Investment Holding
Dato’ Yusli Mohamed Yusoff, CEO17 June 2008
Visit us at http://www.bursamalaysia.com
2
Before 2001- Separate exchanges – KLSE, KLOFFE, COMMEX,MESDAQ
2001 - Consolidation of derivatives exchanges completed (KLOFFE + COMMEX = MDEX)
2002 - Consolidation of stock exchanges completed(MESDAQ merged with KLSE)
2004 - KLSE become a public company limited by shares -Bursa Malaysia
2005 - Listed on 18 March 2005
Our Transformation...
• KLSE: Kuala Lumpur Stock Exchange
• KLOFFE: Kuala Lumpur Options & Financial Futures Exchange
• MESDAQ: Malaysian Exchange of Securities Dealing & Automated Quotation
• COMMEX: Commodity & Monetary Exchange
3
Clearing & Depository by :Citibank & Deutsche
3 Markets:
Main Board : 663 cosSecond Board : 223 cosMESDAQ Market : 125 cos
9 Derivatives Products:
Commodity futuresEquity futures & optionsFinancial futures
Financial instruments:
Non-ringgit securitiesIslamic Sukuk crosslistings
Equities Market Derivatives Market Offshore Market
Trading
Clearing
Settlement
Depository
Trading
Clearing
Settlement
Listing
Clearing
Depository
Integration Across Products and Services
5 Bond Instruments:
M’sia Gov Securities*Gov Islamic Instruments*Central Bank PapersCagamas PapersPrivate Debt Securities
Order Matching*
Bond Market
(Trading)
Negotiation
Reporting
SINGLE EXCHANGE GROUPTotal Market Capitalisation : USD284 Bil (RM930 Bil) @ 12th June 2008
4
Minister of FinanceMinister of Finance
Securities Commission (SC)Securities Commission (SC)
Labuan International Financial Exchange
Labuan International Financial Labuan International Financial Exchange Exchange
Regulatory Framework
Central BankCentral Bank
Bursa Malaysia BerhadBursa Malaysia Bursa Malaysia BerhadBerhad
Labuan Offshore Financial Labuan Offshore Financial Services Authority (LOFSA)Services Authority (LOFSA)
5
1 Executive Director
6 Independent Directors
3 Public Interest Directors (also independent)
10 Board Members @ 16/6/200810 Board Members @ 16/6/20086 Management Committees6 Management Committees
Substantial Shareholders @ 30/5/2008Substantial Shareholders @ 30/5/2008
Dato’ YusliMohamed Yusoff, CEO
DevanesanEvanson, CMO
SelvaranyRasiah, CRO
Omar Merican, COO
Nadzirah Abdul Rashid, CFO
Yew Kim Keong, CIO
SENIOR MANAGEMENT AND SHAREHOLDINGS STRUCTURE
Minister of Finance
Capital Market Development Fund
Newton
19%
19%
9.5%
Foreign Shareholding : 26%Foreign Shareholding : 26%
6
Market Valuation & Listed Companies
375
553
444 465 482
640722 695
849
930
1106984
736 758798 816
865906
9631021
1027
987
Mar
ket V
alua
tion
(RM
b) Num
ber of Com
paniesMarket Valuation Total Listed Companies
As at 12/6/2008
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 YTD 12 June 08
ShariahCompliant
Non- ShariahCompliant
86%
843 Shariah Compliant Companies ; 86% (Mkt Cap USD194B) Source : ISBU
97%
1%1%
Main BoardSecond BoardMesdaqCall Warrants
Market Capitalisation USD284 BIL (RM930 bil)
1%
BOTH CONVENTIONAL & SHARIAH COMPLIANT
97%
Main BoardSecond BoardMesdaqCall Warrants
No. of Counters Listed 1,344
811283
135115
7
4%7%
18%
10%
4%11%4%1%
37%
4%5%
13%
4%
30%
1%5%
9%
11%
21%
1%Number of Listed Companies
DIVERSITY PROVIDES RESILIENCE
Market Capitalisation of KLCI Components
Industrial
TechnologyInfrastructure
Trading/Services
Construction
Others
Consumer Finance
PropertyPlantation
As at 30 May 2008
8
BURSA’S STRONG NICHE IN ISLAMIC CAPITAL MARKET
Expertise
Brand
Infrastructure
1
2 • Islamic finance experts within Bursa Malaysia• Access to Shariah Advisory Council (SAC)
– Close collaboration with Securities Commission on ICM1 transaction and activities• Islamic Financial Services Board (IFSB), international standard-setting organisation for
the Islamic financial services industry• International Centre for Education in Islamic Finance established to develop the global
Islamic finance industry’s human capital• Involvement of leading Islamic finance academics and industry experts as advisors to
capital markets players such as Bursa Malaysia
• Malaysia as leading centre in Islamic banking– 11 standalone Islamic Banks, of which 3 are foreign
• Pioneer in Islamic finance• Islamic friendly
– Highly regarded by Islamic investors, with Middle Eastern liquidity favoring Malaysia over other developed markets
3 • Most established Shariah-compliant legal and regulatory framework• Tax exemptions for Islamic intermediaries
– Asset managers, banking products and Takaful companies• LFX as offshore platform with significant Islamic finance activity
– Significant Sukuk activity– Potential offshore listing destination for Islamic finance products, with access to broad
pool of investors
1. Islamic Capital Markets
9
45%
55%
EFFICIENT REGULATORY FRAMEWORKStimulating Growth of Sukuk Issuance
31%
69%
2006 2007
In 2007, Malaysia has the world’s largest sukuk market of 69% or US$62 billion (RM198.4 billion) of the total issuance of corporate sukuk
Source : Bank Negara and The Islamic Capital Market Task Force (IOSCO)
Malaysia Middle East/GCC
10
OFFERS THE HIGHEST DIVIDEND YIELD
Selected Regional Markets - Dividend Yield
2.32%
2.75%
3.63%
3.92%
4.56%
4.69%
4.20%
1.62%
0.77%
3.54%
China (SHASHR)
South Korea (Kospi)
Indonesia (JCI)
Hong Kong (HSI)
Taiwan (TWSE)
Thailand (SET)
Singapore (FSSTI)
Australia (AS30)
Philippines (PCOMP)
Malaysia (KLCI)
Source: Bloomberg – Dividend yield for main regional indices as at 30th May 2008
11
ATTRACTIVE MARKET P/E VALUATION
Source: Bloomberg - P/E Valuation for main regional indices as at 30 May 2008
14.215.4
11.612.5
14.813.2
14.7 14.714.7 15.1
12.513.4 13.7 13.0
11.3
16.1
Hong Kong Indonesia Singapore Philippines Taiwan Malaysia South Korea Thailand
P/E Forward P/E
12
SIGNIFICANT FOREIGN INVESTORS ACTIVITY REFLECTS MARKET RESILIENCE
85%
82%
69% 81
%
76%
73% 83
%
78%
71%
68% 76%
69%
63%
65%
63%
58%
15%
18%
31% 19
%
24%
27% 17
%
22%
32% 24%
31%
37%
35%
37%
42%29
%
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
YTD May
08
Local Investors Foreign Investors
Breakdown of trading (by value) 1993 to May 2008
13
42%
45%
44% 54
%
44%
49% 59
%
54%
43%
40% 50
%
43%
29%
34%
37%
24%
51%
48%
45% 36
%
42% 43
% 35%
40%
51%
54% 45
%
53%
71%
66%
63%
76%
3%5%6%6% 6%6%7% 7% 11%
10%
14%
8%
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
YTD May
08
Retail Institutions Others
Breakdown of trading (by value) 1993 to May 2008
“Others”- refers to trades conducted for accounts not belonging to individuals/ institutions. Definitions of investors’ type clarified in 2004, hence reducing the type of investor falling under “others” category.
RETAIL PARTICIPATIONDrop in retail volume due to weak investors’ sentiment
14
Malaysian and Foreign Shareholdings as at 31st May 2008
Note : Foreign Nominees reflect shares owned by foreigners but held via Authorised Nominee Companies incorporated in Malaysia.
April 2008Items Total Shareholdings
(Units-Billion)%
Total Market Value(RM-Billion)
%
Direct Holdings 17.3 4.22 44.2 4.56
Foreign Nominees* 56.6 13.82 202.1 20.87
2 Malaysians 335.7 81.96 722.1 74.57
3 Total securities immobilised in CDS 409.6 100.00 968.4 100.00
1 Foreigners
Foreign Shareholdings by Nationality for Selected Countries as at 31st May 2008
Foreign Nominees76.59%
FOREIGN OWNERSHIP HIGH AT 25.4%
Hong Kong1.35%
United Kingdom1.22%
Singapore8.39% Others
11. 91%
Mid-East0.13%
United States of Americas
0.41%
15
20,2
85
11,7
03
14,5
00
19,1
04
22,1
13
26,0
35
27,0
99
24,7
97
22,1
51 30,2
83
105,500128,000
162,628 159,019 158,737 161,544145,107
125,051138,648
128,842
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
Q106 Q206 Q306 Q406 Q107 Q207 Q307 Q407 Q108 April - 12June 08
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
180,000
Daily Average Volume Open Position
QUARTERLY DERIVATIVES ACTIVITY
FKLI : 51,210 contracts on 26 March 08
FCPO : 37,231 contracts on 13 June 07
Total : 73,230 contracts on 26 March 08
Record Daily Volume
16
2 LEADING DERIVATIVES PRODUCTS
51%45%
4%
Total contracts traded FY 2007 = 6.2 millionTotal contracts traded FY 2006 = 4.1 million
KL Composite Index Futures (FKLI)Crude Palm Oil Futures (FCPO)
3-Month Kuala Lumpur Interbank Offered Rate Futures (FKB3)
54%
7%
39%
50%
25% in 2007
57%40%
3%
51%47%
2%
94% in 2007
Total contracts traded Q1 2008 = 1.8 millionTotal contracts traded Q1 2007 = 1.6 million 13%
17
DERIVATIVES MARKET DEMOGRAPHYFKLI
* Local - A local participant is an individual who owns a seat in the Exchange, registered with SC and is allowed to trade all futures contracts listed on the Derivatives Exchange for his or her own account.
31%19% 14% 16% 16% 13% 15% 17%
45%48%
45% 43% 40% 40% 41% 43%
6%5% 3% 3% 2% 1%
14% 23% 31% 37% 40% 45% 42%3%
2%
39%
2001 2002 2003 2004 2005 2006 2007 YTD April 08
Locals Domestic Retail Domestic Institutions Foreign Institutions
KLCI Futures
18
* Local - A local participant is an individual who owns a seat in the Exchange, registered with SC and is allowed to trade all futures contracts listed on the Derivatives Exchange for his or her own account.
40% 38% 35% 33% 35% 31% 25% 27%
15% 21% 26% 24% 23% 27% 34% 37%
27% 21% 18% 20% 22% 25% 22% 14%
14% 14% 17% 20% 18% 16% 18% 21%
2001 2002 2003 2004 2005 2006 2007 YTD April 08Locals Domestic Retail Domestic Institutions Foreign Institutions
Crude Palm Oil Futures
DERIVATIVES MARKET DEMOGRAPHY FCPO
19
LIBERALISATION EFFORTS – NO CAPITAL CONTROL
Accelerate tax restructuring: Reits (15% local, 20% foreign): Corporate tax (25% - 2009,
26% - 2008)
Liberalisation of Foreign Listing & Dual Listing
No Capital Gains TaxNo Property Gains Tax
Re-introduction of regulated short selling (RSS) and stock borrowing & lending (SBL)
Admission of 5 foreign fund managers (Aberdeen, Nomura, BNP Paribas, Credit Agricole, Franklin Templeton Investments)
Admission of 5 foreign brokers (UBS, CLSA, CSFB, Macquarie, JP Morgan)
20
PROGRESSIVE BUDGETARY MEASURES
LOWER CORPORATE TAXES & SINGLE TIER TAX SYSTEMTo deliver attractive earnings ratio and improve the investability
ATTRACTING MIDDLE EAST FUND3 new stockbroking licensesTax incentives for Islamic stockbroking
ENCOURAGE INTERNET-BASED INVESTINGFully negotiable commission rate
A BOOST TO FUND MANAGEMENT INDUSTRYForeign ownership will be allowed up to 70%Tax exemption on Islamic fund management fees activities till 2016
STIMULANT FOR PROPERTY SECTORMonthly withdrawal from EPF for mortgage repayment50% stamp duty exemption for house less than RM250,000
21
Infrastructure
RSS/SBL Financial Market Trading Platform : Fixed IncomeDirect Market Access : DerivativesBursa Trade Securities
ProductsComplete launch of new FBM Index SeriesFTSE Bursa Malaysia 30 ETF Dow Jones Islamic Market Malaysia Titans 25 ETF or MyETF
Regulatory
Revised listing feesDealers’ representatives mobilityReduced trading fees for derivatives contracts Revised clearing fees
PLCs
CMDF – Bursa Research Scheme IR Incentive ProgrammeMalaysia Investor Relations Association (MIRA)Cross border listings frameworkUnification of 2 Boards
ENHANCING MARKET ATTRACTIVENESS BROADENING MARKET ACCESS
`
22
EXCHANGE’S TARGETS
Velocity
Growth in derivatives contracts traded
56% 46%
Target 1Q08
50% 13%
i
Growth in Velocity to be driven by :Improvement of Infrastructure
Introduction of More Products
Other Initiative
ETF, Reits & Warrants
Retail Plan
Market Making
Growth in Daily Average Contracts to be driven by:
FUPO
Market Making
DMA DerivativesBursa Trade Securities & DMA Equities
Bursa’s KPI 2008
Improvement of Infrastructure
Introduction of New Product
Other Initiative
23
Dubai Gold & Commodities Exchange Development of derivatives markets
Multi Commodity Exchange of India Limited Development of commodities market and for cross listing of products
Dalian Commodities Exchange Joint organizing of “China International Oil and Oilseeds Conference”.
Australian Securities Exchange Facilitating communication channels and fostering relations
Singapore Exchange Derivatives Trading Limited Exploring future business relationship opportunities
NYSE EuronextTechnology Solutions Provider for equities, derivatives & DMA platform: Through NYX Advanced Trading Solutions
GLOBAL NETWORK
Korea Exchange Development of Financial Market Trading Platform for the bond market in Bursa Malaysia
The Agricultural Futures Exchange of Thailand Development of commodities and futures markets
Ho Chi Minh City & Hanoi Securities Trading Centre Facilitating communication channels and fostering relations
Tokyo Stock Exchange Providing mutual cooperation on personnel training & information exchange
PT. Bursa Berjangka Jakarta Development of futures and commodities markets
Hong Kong Exchanges & Clearing Sharing market surveillance information
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