All should access listed stocks

THE best listing on Bursa Malaysia in a long time, unfortunately, is an issuance most investors cannot buy.

Shares of Singapore-based IT solutions provider Cloudaron Group Bhd rose by about 64% this week after making its debut on Bursa Malaysia’s Leap Market at 11 sen and closed at 18 sen a share yesterday.

Trading interest is nowhere close to a normal new listing on Bursa Malaysia, but attracted a trading volume of 315,000 shares on its debut, with interest slowly waning in the following days.

Bursa Malaysia has put restrictions on the type of investors who can trade in the Leap Market. Sophisticated investors with net assets of more than RM3mil, or with an annual income of RM300,000, are allowed to buy shares on the latest market on Bursa Malaysia designed for growing companies.

Cloudaron is a profitable company and generates 81% of its revenue in Singapore.

The limitation of buyers to sophisticated investors might be designed to protect the average investor from taking on more risk than what the authorities deem suitable, but there are riskier companies to invest in on Bursa Malaysia’s other two markets.

Apart from companies that are making a miniscule profit and trading at astronomical price-to-earnings ratios, there are shares of companies that are classified as Practice Note 17 that are still trading, even though the classification serves as a warning to investors.

There are also companies that last posted a profit in the last decade that are still trading and seeing investor interest.

Making sure investors have a high minimum income or net worth might be one of the benchmarks in determining a sophisticated investor, but it is not 100% foolproof.

The rule of thumb should be that once a company is traded on the stock market, it should be the prerogative of investors to know the risks they are taking when making an investment, and there should not be limits to differentiate investors into different classes.