SC sets up research institute to promote growth

Ranjit says ICMR will provide solutions to promote growth

KUALALUMPUR: The Securities Commission (SC) has established a dedicated research institute to conduct studies on thematic issues relating to the capital market, says executive chairman Tan Sri Ranjit Ajit Singh.

The Institute of Capital Market Research Malaysia (ICMR) aims to provide innovative solutions that could further augment growth in the capital market.

“The ICMR aims to develop bridging platforms for the sharing of knowledge and ideas through a multi-stakeholder approach with policymakers, regulators, the academia and industry,” Ranjit said.

In his opening address at the World Capital Markets Symposium 2018 (WCMS 2018), Ranjit said the ICMR has committed to working with strategic research partners on various areas of the capital market.

“This includes The Wharton School, University of Pennsylvania, through their Alternative Investments Initiative for research on venture capital and private equity financing,” he said.

“We also welcome the presence of the other research partners, the Nomura Institute of Capital Markets Research, Japan, and the Jeffrey Sachs Centre on Sustainable Development,” he added.

The ICMR was launched by Prime Minister Datuk Seri Najib Tun Razak yesterday.

Ranjit noted that the capital market continues to play a key role in financing the economy, enabling capital formation for corporates and infrastructure.

“Capital markets play an indispensable role in connecting finance to the real economy. Rightly harnessed, markets are one of the most powerful channels for delivering longterm economic growth and generating positive externalities for society as a whole,” he said, adding that the Malaysian capital market is expected to raise up to RM120bil through various market segments, including the country’s bond market, which was the third largest in Asia.

Meanwhile, at a panel discussion on the “Future of Finance” at WCMS 2018, CIMB Group Holdings Bhd chairman Datuk Seri Nazir Razak said banks would have to embrace technology and go beyond “pure finance” to remain relevant in the changing landscape.

“My view is that in the next five to 10 years, there will be three types of banks. One are banks that get it right and actually succeed; two are banks that fail to embrace technology and get marginalised and have little ROEs (return on equity); and three are banks that lent too much money to companies that did not prepare for the fourth industrial revolution – these banks will go bust,” he added.

He noted that banks are facing increasing pressure from competition from non-bank financial institutions and fintech companies.

“The competition has been very, very intense,” he said, adding that banks that had responded to the rising competition and changing operational environment continued to do well and saw their valuations growing.

“Many banks have realised that yes, we are under threat, but we also have a lot of advantages – we have a lot of data, we still have customers’ trust and we also have the faith of regulators,” he said.

“But this window could disappear if we don’t wake up and do something about it,” he said, adding that banks must collaborate with fintech and other businesses to create an eco-system that could endear themselves to their customers, as he noted that some people still regarded banks as “evil necessities”.

Nazir said banks had to work on improving their cost efficiencies to survive.