After months of delay, Bursa Malaysia and the Singapore Exchange (SGX) are the first two markets to be connected to a new ASEAN Trading Link, providing a single entry-point for accessing Southeast Asia’s stock markets.
Delayed by regulatory issues, the link was originally scheduled to open in June, with the Stock Exchange of Thailand scheduled to join in August 2012. ASEAN Exchanges, a collaboration of the Association of Southeast Asian Nations (ASEAN) national bourses, has now confirmed SET will connect in October.
“The ASEAN Trading Link marks the first key milestone for ASEAN Exchanges towards breaking down the barriers to cross-border trade in ASEAN,” said Dato’ Tajuddin Atan, CEO, Bursa Malaysia, in a speech on Tuesday. “The ASEAN Trading Link is an excellent conduit to tap the region’s growth opportunities as it allows investors an easy access to a wider investment selection across the connected markets.”
Jointly, the three initial markets will offer nearly 3,000 listed companies with a market capitalisation of US$1.4 trillion, accounting for some 70% of the total market capitalisation of ASEAN.
Other ASEAN stock markets – the Indonesia Stock Exchange, the Philippine Stock Exchange and Vietnam’s Ho Chi Minh and Hanoi exchanges – are involved in discussions to join the network, but their participation is not confirmed.
“The participation of individual ASEAN markets through the ASEAN Trading Link will help the region compete with bigger markets and economies,” said Magnus Bocker, CEO, SGX. “Investors will gain from access to more investment opportunities.”
So far, 31 brokers have joined the ASEAN Trading Link, most of which are local Malaysian, Singaporean and Thai firms.
“We are pleased to have the commitment of two of ASEAN’s leading investment banks, namely CIMB Investment Bank and Maybank Investment Bank, as this sends out a strong message that the large market players are certainly on board and view the ASEAN Trading Link as a veritable tool to grow their business across ASEAN and ultimately, bring greater liquidity in to the ASEAN capital market,” said Atan.
Brokers of participating exchanges can now seamlessly trade shares on other participating markets easily as investing in their home-country stock exchange.
“The ASEAN Trading Link provides brokerage firms such as ours the much desired ease of market access to grow our foreign clients base without the hassle and cost of expansion into other markets”, said Chew Sing Guan, managing director of Malaysian broker Mercury Securities.
ASEAN Exchanges will also continue to promote ASEAN as an asset class to rival regional giants China and India.
“The emergence of ASEAN as a recognised asset class is already happening. Currently there are two indices developed by FTSE that track the performance of ASEAN’s leading companies. These two indices are the FTSE/ASEAN Index and the more concentrated FTSE/ASEAN 40 Index and the number of such ASEAN-focused investment products is only likely to grow,” said Atan.