KUALA LUMPUR (March 9): The Securities Commission Malaysia (SC) will launch a research scheme for small and mid-cap listed companies by June to address the insufficient coverage that these companies are receiving from research houses.
 
SC chairman Tan Sri Ranjit Ajit Singh said the scheme, proposed in October last year in Budget 2017, is aimed at ensuring small and mid-cap companies attract greater investor participation.
 
“We are working with the investment banking association, the stockbroking association, investment funds and Bursa Malaysia, as well to ensure that there is independent research provided for these companies.
 
“The idea is to identify a pool of research houses who will participate in this scheme, and to have each company covered by two research firms; this would in turn result in better dissemination of [information] to retail investors,” he said at a news conference, in conjunction with the release of the SC’s 2016 Annual Report.
 
The SC chief said an investment fund has also been planned for small and mid-cap listed companies, whereby discussions are currently ongoing for institutional investors to allocate a certain portion of financial resources to these companies.
 
“This will help to kickstart things, but the idea is to get a virtuous cycle, whereby you then get participation from retail investors, and hopefully with the research scheme, there will be more interest from retail investors,” he said.
 
Ranjit said some of the funds will be allocated to external fund managers who will set up small-cap funds to focus on this segment.
 
“We will also look at creating indices for these companies, and those indices will help benchmark performance assessment for the development of products such as exchange traded funds over time,” he said.
 
Ranjit said the research scheme and investment fund will be a three-year programme that will be launched in phases.