Capital markets executive summary | Fri 1 Dec 2023

Capital markets executive summary | Fri 1 Dec 2023

Bursa to amend listing requirements

Bursa Malaysia Securities Bhd issued a consultation paper on proposed amendments to the Main Market and ACE Market listing requirements. They include: (a) disclosures on placement exercises, status of proceeds utilisation and past equity fundraising exercises where the proceeds have not been fully utilised; (b) subjecting employee stock option schemes to the same restriction on the total number of shares issued under a share issuance scheme, and more transparency on the options or shares granted based on participant categories; (c) disclosure of CEO’s remuneration on a named basis for listed companies, closed-end funds and business trusts; (d) allowing a financially distressed listed issuer or a listed issuer with insufficient operations to implement interim proposals pending regularisation only under extraordinary conditions; and (e) obeying chain listing requirements for listing of subsidiaries on any stock exchange. The public can give their feedback by 26 Jan 2024 at https://www.bursamalaysia.com/regulation/public_consultation.

Bank Simpanan Nasional’s AAA and P1 ratings affirmed

RAM Ratings affirmed the bank’s financial institution ratings and the AAA rating of the RM3.5b sukuk wakalah programme. The ratings reflect a very high probability of government support for the Minister of Finance Inc’s wholly-owned subsidiary. Section 20 of the Bank Simpanan Nasional Act 1974 stipulates that the bank’s deposits are guaranteed by the government. Gross impaired loan (GIL) ratio increased from 1.2% at end-Dec 2021 to 1.7% at end-March 2023 because of personal financing given to the 2022 flood victims, although there is no credit risk since it is funded by government grants. Without the financing, the GIL ratio is 1.2% against the industry’s 1.7%, strengthened by the salary-deductible personal financing portfolio, which is 37% of total financing. Home financing could expose the bank to credit deterioration because its customers are primarily in the lower-income bracket. Adjusted GIL coverage including regulatory reserves of 199% offers enough buffer to absorb such losses. Net interest margin narrowed from 3% in FY2021 to 2.9% in FY2022 to 2.7% in 1Q FY2023. There will be further margin contraction because of targeted growth of the lower-yielding home financing book and deposit competition. Tier-1 capital ratio fell from 12.6% at end-Dec 2022 to 11.9% at end-Mar 2023 while total capital ratio was down from 21% to 20.1%, weaker than its developmental financial institution peers, due to a one-off RM223m loss adjustment to retained earnings on 1 Jan 2023.
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GXBank launched to the public

The Grab-led digital bank is the 1st of the five Bank Negara Malaysia licensees to have been launched. It went through months of internal testing with employees and partners followed by beta-testing with 20k Malaysian users since Sep 2023. Almost 50% of beta testers created Pockets, the app’s savings goal feature, earning 3% per annum in interest. According to the bank, the top 3 reasons customers save for are emergencies, holidays and investments. Each customer’s deposits are protected by PIDM up to RM250k. The bank will roll out the GX Card debit card, which is developed together with Mastercard and offers benefits including cashback, ATM fee waiver and shopping rewards points.

Tata Technologies rises 180% on IPO

The company provides engineering research and development services, product development and digital solutions to global OEMs and their key suppliers. The automotive segment contributes 70% of sales. Tata Technologies, the 1st Tata company to list since 2004, raised INR30.4b (USD365m) amidst 69 times oversubscription. Its shares hit a high of INR1,400 against the INR500 offer price. Of the 205 IPOs in India this year, only 2 raised more than USD500 million, although 80% are trading above their offer prices compared to 62% in Asia. Indian Renewable Energy Development Agency Ltd, a state-run lender to renewable energy projects, rose 88% on its Wed debut. Gandhar Oil Refinery India Ltd surged 104% yesterday. The IPO boom in the past 2 years has been driven by optimism in the domestic market.

Philippines’ first sukuk issuance raises USD1b

According to the Bureau of the Treasury, the 5.5-year tenor sukuk were priced at a yield of 5.045%. The offer was 5 times oversubscribed. The Philippines is one of the most active sovereign debt issuers in Asia and the government plans to raise USD44b in the debt markets, 1/4 of which will be from foreign sources, to fund the PHP5.77t 2024 budget. The predominantly Catholic country has 6.4% Muslims out of its 110m population and the sukuk issuance is part of the government’s plans to develop Islamic banking. Citigroup, Deutsche Bank, Dubai Islamic Bank, HSBC, MUFG and Standard Chartered were the bookrunners and managers.