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12.30pm: KLCI 1,076.08 (+2.87); FBMEmas 7,175.02 (+14.74); FBM2BRD 5,196.11 (-17.34); Up 157; Down 209; Unch 195; Vol: 142.58m shares.

04-08-2008: Room to widen retail participation in bond market

by Sharmila Ganapathy
Email us your feedback at fd@bizedge.com
How to Protect
Your Money
KUALA LUMPUR: The pool of retail investors in the bond market can be widened by allowing the man-on- Protection for your
the-street greater access to government securities.
bank savings up to
RM60,000. Find
Currently, retail investor participation in the domestic bond market is minimal compared to institutional out how.
investors and high net worth individuals who make up the bulk of demand for government and corporate www.pidm.gov.my
bonds. Retail investors’ only exposure into the bond market is via bond funds managed by unit trusts.

Bondweb Malaysia Sdn Bhd chief operating officer Meor Amri Meor Ayob said retail participation in
trading of bonds was definitely possible, however, market education was important, as retail investors in Market
Malaysia were less exposed to workings of the bond market than the more established equities market. Investments
Protect your
With the current uncertain conditions in the equities and corporate bond markets, portfolio & multiply
the safer avenue for retail investors was government securities, he said. your money. Free
investing advice!
“Currently, government bonds are only open to professional investors. To allow www.InvestorsDailyEdge.com
retail investors to participate, a separate retail issue could be created,” Meor Amri
said in a recent interview with The Edge Financial Daily.

However, the retail issues needed to be traded at a different platform than those
Invest and get
open to institutional and higher net worth investors. This is because at present, profit now
trading of government and corporate bonds was done over the counter at inter- Hight profit returns
bank level with a minimum trade amount of RM5 million. every day 1000$
becomes 2000$
Currently, only licensed inter-bank players under the Banking and Financial Institutions Act and universal after 11days
brokers approved by the Securities Commission are permitted to trade government securities. gethighreturndaily.com

However, as it wouldn’t be cost effective for banks to trade retail issues in the same way as they did larger
denominated ones, a better alternative would be for the central bank to allow retail investors to purchase Free Forex
government bonds at their branches or via appointed banks, Meor suggested. Education
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These avenues currently don’t exist and neither do processes that facilitate retail trading in bonds. successful trader.
With Forex,
“A separate clearing house, payment gateway and central depository system need to be created the knowledge is
same way as for equities. Some banks can be appointed to quote at the retail level,” he said. power!
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Meor Amri added that retail participation in government bonds had already been implemented with some
success in Indonesia, via its Indonesian retail bonds (ORI).
EdgeDaily Exclusives
The ORI bonds are attractive to retail investors as they offer better yields and lower credit risk than
corporate bonds and other fixed income instruments, Meor Amri said. The recent ORI004 issue for
20-08-2008: Honda
instance had a coupon rate of 9.5%. hopes to sell 200 units of
new Jazz per month
He added that the government of Indonesia had created a separate exchange, payment gateway and
20-08-2008: KLCI ends
central depository to give retail investors access to these bonds. The bonds were issued by the 0.05pts up at mid-day
government to help fund economic growth activities, he said.

20-08-2008: TM has
best proposal for HSBB,
Indonesia’s Ministry of Finance kick started the sale of government retail bonds in the primary market in says CEO
2006 to encourage demand for smaller denomination bonds and hence increase the investor base and
20-08-2008: P1 to
market liquidity.
spend RM1b on WiMAX in
next 4 years

20-08-2008: Jeffrey
rekindles defection talk
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20-08-2008: Koh says
Anwar directed extension of
Business Focus loan period

20-08-2008: RM104m

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20-08-2008: IGP
undergoes heart surgery

20-08-2008: YTL Corp’s
net profit rises despite
poorer 4Q

20-08-2008: Boustead
first-half profit doubles to
RM304m

20-08-2008: KNM close
to acquiring Brazilian firms

20-08-2008: MAS
remains a buy in
challenging times

20-08-2008: KPJ to sell
properties for RM305.9m

20-08-2008: Roll out
WiMAX services by year-
end, says Shaziman

20-08-2008: Widen
personal income tax
brackets, says MIT

20-08-2008: Hartalega
1Q net profit at RM12.9m

20-08-2008: Volvo S40
new pricing to boost sales

20-08-2008: Biodiesel
exports may rise 50% this
year

20-08-2008: Shouting
match at Dewan Rakyat
over assault

20-08-2008: M’sia views
foreign meddling seriously,
says Rais

20-08-2008: Koh:
Gerakan will not be a ‘yes
man’ in BN

20-08-2008: Anwar
targets mega projects in
polls drive

20-08-2008: Six
Chinese schools in
Permatang Pauh get
RM1.2m

20-08-2008: Corporate
M'sia puts best foot forward

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http://www.theedgedaily.com/cms/content.jsp?id=com.tms.cms.article.Article_8bc184... 8/21/2008