Tuesday, June 4, 2013

When a FBM KLCI company has its shares cornered?

At last, the list of the Top 30 shareholders are out after the much fanfare about the stocks being placed out to mainly cornerstone investors. For IHH's IPO, we know why most of the stocks are left for the institutionals. Just look below after 9 months from its listing, Top 30 consist of a whopping 92.83% of the total shares held. 

Frankly, this is not good for the exchange which is supposed to promote its vitality to the world. Already EPF owns more than 10% of the Malaysian market, which is bad. We do not want a company which has RM30 billion market capitalization but almost 93% of its shares are held by the Top 30.

The tightly held shares is bad as it would allow the misperception that Malaysian shares can be controlled. It is allright that they are held by the large funds like Blackrock, JP Morgan, Tiger Funds but not like this. On one hand we try to keep a minimum free float but on the other hand a KLCI company has such a large number of its holdings by so few hands. Yes, it has lots of shares but this is still not right.

For those whom would like to know as a comparison, UMW has its Top 30 holding less than 80%.

Telekom Malaysia has around 80% as below.


Black Ink said...

At the risk of sounding like a "conspiracy theorist" -Could this perhaps be a fancy way of politically-linked groups/individuals/parties, parking/laundering billions of ill-gotten ringgit (tax payer funds), by mixing it with public funds (also tax payer funds) whilst mitigating downside equity risk by acting in concert and tying up float in the top 30?

felicity said...

I doubt so