The local stock exchange has had a roller-coaster year, hitting a record high and then taking a turn for the worse as sentiment weakened after the general election and the global economic slowdown. As 2008 draws to a close, Bursa Malaysia chief executive officer Datuk Yusli Mohamed Yusoff tells GOH THEAN EU what’s in store for the new year.
Hopefully, that will happen over the next few months. Once there's an agreement that a bottom has been reached, then you can expect the market to start picking up. So, first quarter of 2009, there will be a lot of focus on the data coming out from the US. As far as our economy is concerned, the government had announced a stimulus package. The focus here is to make sure the domestic economy remains fairly robust, and to keep the domestic economy robust, it is important for Malaysians to keep supporting the industry. So, we hope that the stimulus package will have a desired impact on the people.
A recession will happen if everything is sort of stagnant. That means people stop spending.
Q: Which area of Bursa's business do you expect to see growth next year?
A: Equities, because the situation is not clear at the moment. We are expecting probably less transaction in the business and stable revenue. We are hoping it will be similar. As for the derivatives, we are hoping that the derivatives market will do better next year.
Q: Why are you expecting the derivatives market to do better next year?
A: So far this year, we have seen the derivatives volume has been stable. Infact, for our palm oil contracts, we have seen slightly higher volume than last year. As you know, we have launched direct market access for derivatives, and we expect the amount of volume to increase over time.
We also expect the interest in crude palm oil futures contract to continue to grow, because as a commodity, it has become more and more popular.
Q: Bursa has big plans for 2009. There will be launching of direct market access for equities, introduction of a unified board and new Mesdaq, as well as launching of two new FTSE palm oil indices. Why introduce these products and services at a time when market sentiment is expected to be weak?
A: We believe that the current environment is the best time for us to do all these such as launching of the new system. Because, really, what we are trying to do is to play catch-up with the other markets. We want to take advantage of the current environment. At the same, the proposal of a unified board is also part of improving the market structure and to improve the quality of the company. As you know, companies in the second board have lost a lot of its shine since the crisis. As for the revamp of Mesdaq market, we want to make it easier for companies to list.
Q: Any further liberalisation next year?
A: I think liberalisation is an ongoing thing. So, as we progress, every aspect of our rules, may it be listing requirement or process, we will continue to engage with the industry and the market to get the feedback.
Wherever possible, we will look at relaxing the rules. We want to make it as easy as possible for people to do business here.
At the same time, if you notice some of the incidents that are going on, we might need to tighten some of the things. One of the areas would be corporate governance. Although we have made a lot of improvement on corporate governance over the last 10 years, there're still incidents of breach going on. When this type of things happen, we look at our rules, to see whether our rules are too relaxed or is it because our enforcement is not strong enough or is it something else.
We really don't want to tighten any more rules, if we can help it. We feel that certain things cannot have so many rules. If there are too many rules, then it will be more costly for companies to maintain their listing status.
Q: Some of the remisiers and brokers are calling for shorter trading hours. What's your view on that?
A: The shorter trading hours is something we have been looking at. We are currently discussing with the industry. We found that not everyone wanted shorter hours. So, we are still continuing our dialogue. If we can get majority of the players to agree on shorter trading hours, then we won't stand in the way. If we can have same amount or more amount of trading in shorter period, then why not? You could save the industry a lot of money.
Q: So, what can Bursa investors expect from you and the company in 2009?
A: We are working on a number of initiatives. Basically, we are trying to build a better quality market. The infrastructure will be better and the product range will be better.
But it all depends on the market conditions. If market condition improves, then we might see an improvement. But if the market condition stays the same or becomes worse, then be prepared for a tougher year.
Q: What is your current staff strength? Any plans to reduce workforce to cut costs?
A: We have about 600 people now. We have no plans to downsize. Obviously, we want to increase productivity and efficiency. We are trying to manage our costs and we are looking at ways to cut variable costs. This means we've got to be more careful with our travel costs, promotion costs, and advertising costs.
Q: You have been the CEO of Bursa for almost five years. Is this the toughest year so far?
A: Yes ... (but) every year has been different. This year, interestingly, it started out with a bang, our index hit the highest level. Then, unfortunately, it has been downhill ever since. But, having said that, because our market fell early (due to the) kneejerk reaction to the general election, so we had reached a lower level before the other market started to go down. What was comforting was that we seemed to have stabilised when the other market started falling.
Q: What are the challenges you have come across since you joined Bursa?
A: We have had our challenges. One of the biggest challenges we had was the launching of our system. Ideally, we wanted to launch our system earlier, at least a year earlier. In terms of retail participation, we have not made as much progress as we should have. What is important for the market is the quality of the retail investors, not quality in terms of how much money they have, but quality in terms of how much knowledge they have to invest. That is one aspect we think we did not gain as much progress as we wanted.
Business Times
QUESTION: 2008 has been a challenging year. Bursa's earnings (for the first nine months) have gone down by 52 per cent against last year. What's the outlook for 2009?
A: If the global economic situation does not improve, a sign of recovery does not appear. Maybe within the next few months, then potentially 2009 will be worse. But, if signs of recovery do appear within the next few months - as you are aware, the market tends to recover faster than the real economy - then you can expect the market to pick up. Then, there is a possibility next year may not be worse than this year. At the moment, it is still quite hard to predict. My view is that a lot of these signals or signs that we are looking would come out from the US.
Q: Analysts are saying that the market will be weaker in the first half and expect a recovery to begin in the second half. What are your thoughts?
A: What is important is for people to be able to see the bottom, because once we are able to see the bottom, we will know that things will start getting better. I think the assumption for today is that nobody is quite sure if we have hit the bottom, or when the bottom will be reached.
A recession will happen if everything is sort of stagnant. That means people stop spending.
Q: Which area of Bursa's business do you expect to see growth next year?
A: Equities, because the situation is not clear at the moment. We are expecting probably less transaction in the business and stable revenue. We are hoping it will be similar. As for the derivatives, we are hoping that the derivatives market will do better next year.
Q: Why are you expecting the derivatives market to do better next year?
A: So far this year, we have seen the derivatives volume has been stable. Infact, for our palm oil contracts, we have seen slightly higher volume than last year. As you know, we have launched direct market access for derivatives, and we expect the amount of volume to increase over time.
We also expect the interest in crude palm oil futures contract to continue to grow, because as a commodity, it has become more and more popular.
Q: Bursa has big plans for 2009. There will be launching of direct market access for equities, introduction of a unified board and new Mesdaq, as well as launching of two new FTSE palm oil indices. Why introduce these products and services at a time when market sentiment is expected to be weak?
A: We believe that the current environment is the best time for us to do all these such as launching of the new system. Because, really, what we are trying to do is to play catch-up with the other markets. We want to take advantage of the current environment. At the same, the proposal of a unified board is also part of improving the market structure and to improve the quality of the company. As you know, companies in the second board have lost a lot of its shine since the crisis. As for the revamp of Mesdaq market, we want to make it easier for companies to list.
Q: Any further liberalisation next year?
A: I think liberalisation is an ongoing thing. So, as we progress, every aspect of our rules, may it be listing requirement or process, we will continue to engage with the industry and the market to get the feedback.
Wherever possible, we will look at relaxing the rules. We want to make it as easy as possible for people to do business here.
At the same time, if you notice some of the incidents that are going on, we might need to tighten some of the things. One of the areas would be corporate governance. Although we have made a lot of improvement on corporate governance over the last 10 years, there're still incidents of breach going on. When this type of things happen, we look at our rules, to see whether our rules are too relaxed or is it because our enforcement is not strong enough or is it something else.
We really don't want to tighten any more rules, if we can help it. We feel that certain things cannot have so many rules. If there are too many rules, then it will be more costly for companies to maintain their listing status.
Q: Some of the remisiers and brokers are calling for shorter trading hours. What's your view on that?
A: The shorter trading hours is something we have been looking at. We are currently discussing with the industry. We found that not everyone wanted shorter hours. So, we are still continuing our dialogue. If we can get majority of the players to agree on shorter trading hours, then we won't stand in the way. If we can have same amount or more amount of trading in shorter period, then why not? You could save the industry a lot of money.
Q: So, what can Bursa investors expect from you and the company in 2009?
A: We are working on a number of initiatives. Basically, we are trying to build a better quality market. The infrastructure will be better and the product range will be better.
But it all depends on the market conditions. If market condition improves, then we might see an improvement. But if the market condition stays the same or becomes worse, then be prepared for a tougher year.
Q: What is your current staff strength? Any plans to reduce workforce to cut costs?
A: We have about 600 people now. We have no plans to downsize. Obviously, we want to increase productivity and efficiency. We are trying to manage our costs and we are looking at ways to cut variable costs. This means we've got to be more careful with our travel costs, promotion costs, and advertising costs.
Q: You have been the CEO of Bursa for almost five years. Is this the toughest year so far?
A: Yes ... (but) every year has been different. This year, interestingly, it started out with a bang, our index hit the highest level. Then, unfortunately, it has been downhill ever since. But, having said that, because our market fell early (due to the) kneejerk reaction to the general election, so we had reached a lower level before the other market started to go down. What was comforting was that we seemed to have stabilised when the other market started falling.
Q: What are the challenges you have come across since you joined Bursa?
A: We have had our challenges. One of the biggest challenges we had was the launching of our system. Ideally, we wanted to launch our system earlier, at least a year earlier. In terms of retail participation, we have not made as much progress as we should have. What is important for the market is the quality of the retail investors, not quality in terms of how much money they have, but quality in terms of how much knowledge they have to invest. That is one aspect we think we did not gain as much progress as we wanted.
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