Lack of focus on capital market

BUDGET 2020 has many positives.

It is aimed at creating more jobs, raising income levels, reducing the gaps between the regions in the country and the narrowing of inequality between groups of people.

A number of key industries are also being boosted, with ample funding being provided.

But one segment that has been markedly left out is the capital market.

Malaysia’s capital market is going through a challenging phase, partly also due to global issues.

Foreign investors continue to shun our equities market, although a number have been buying our bonds. The latter could be the result of lower interest rates elsewhere.

So the question is, should Budget 2020 have done more to boost the local capital market?

To be fair, it is understandable that Budget 2020 has focused on uplifting the lower income groups.

By extension, it is conceded that this group does not have much direct exposure to the capital market.

On the flipside though, a lot of the wealth of the general public lies in government investment funds ranging from Permodalan Nasional Bhd (PNB) to the Employees Provident Fund (EPF).

These funds have very large exposures to the local equity market.

If Bursa Malaysia has a good year, then these funds are in a better position to raise their dividend payouts.

The capital market plays an important role in the funding growth of companies in the country. As such, there is justification for efforts from the government to do things within their means to boost the local market.

What was expected was at least the planned listing of Petronas Carigali, the upstream arm of Petroliam Nasional Bhd (Petronas).

After all, Prime Minister Tun Dr Mahathir Mohamad recently said that this was a possibility. Other incentives could have taken the form of tax waivers for dividend income from the stock market, say for the next few years. Or tax reliefs could also be given to encourage more retail participation in the market.