Asean Trading Link catalyst for more inflows

KUALA LUMPUR: The establishment of Asean Trading Link by Asean exchanges this month will be a catalyst for further fund inflows into South-East Asia and increase the region’s attractiveness as a bigger capital market bloc, rivalling more established and bigger ones in Hong Kong, China and India.

For a start, the Asean Trading Link, to be launched in the middle of this month, will connect the stock exchanges of Malaysia and Singapore, with Thailand to be connected in August. Future partners include Indonesia, the Phillipines and Vietnam.

“The Asean Trading Link enables the capital markets here to have a common trading platform. This will galvanise forces of the individual markets in South-East Asian to be a more significant sizeable player on the global stage,” MIDF Amanah Asset Management Bhd chief executive officer and chief investment officer Scott Lim told StarBiz.

“The Asean Trading Link set-up is timely and will be a catalyst for further fund inflows because people from outside will now begin to see the markets in the region as a formidable bloc and Asean Exchanges will be able to compete with bigger markets in the wider Asian Pacific region such as China,” he said.

The Asean Trading Link will initially connect the three stock exchanges of Malaysia, Singapore and Thailand at the end of this year and will comprise more than 2,200 companies with a combined market capitalisation of RM4.45 trillion.

The Asean Exchanges, when fully set up, would comprise seven stock exchanges from six different countries with an estimated 3,600 companies and a combined population of 529 million. The market capitalisation of the combined exchanges, at RM6.36 trillion, will be bigger than India’s economy.

Lim said Asean Exchanges could be likened to what the European Union did with the establishment of the common currency with the aim of combining economic forces of several countries to be a more significant player on the global stage.

However, he said Asean was nowhere near the stage for a monetary union

Interpacific Securities research head Pong Teng Siew said the benefits of the link included reduced transation costs, with brokerages now having direct access into other markets without having to go through another intermediary.