RM3.5 Billlion ETFs To Be Floated On Bursa Malaysia By End 2007

KUALA LUMPUR, June 7 (Bernama) -- The cumulative RM3.5 billion worth of exchange traded funds (ETFs) are on track to be floated on Bursa Malaysia by end of this year, Deputy Finance Minister Datuk Dr Awang Adek Hussin said Thursday."We are in the process of formalising the introduction of these ETFs in the market. We have to do a lot of proprietary work," he told reporters at the prospectus launch ceremony of the FBM30ETF, the country's first ETF, by AmBank Group here.He said two joint working groups have been established with the task, among others, of putting up a timetable to facilitate the launch of at least one ETF before the end 2007 target as set out earlier.Second Finance Minister Tan Sri Nor Mohamed Yakcop heads the first working group while Awang Adek leads the second group, with both groups having top management members from government-lined companies (GLCs), policy makers and regulators.The cumulative RM3.5 billion ETF initiative is part of the framework to decrease the government's strategic holdings in GLCs in an orderly manner.The initiative was announced by Prime Minister Datuk Seri Abdullah Ahmad Badawi, who is also the Finance Minister, in March during the Invest Malaysia 2007 conference.The GLCs will participate in the ETFs by selling a portion of their portfolios in exchange for units in the ETFs, thus helping to add liquidity and promote greater retail participation in the equity market.Thin liquidity is considered a major barrier for foreign investment in the local stock market, which is dominated by large GLCs that rarely figure among the most-traded stocks.Many foreign investors fear they may not be able to buy and sell large quantities of shares in these GLCs without the price moving against them.The new ETFs are aimed at releasing some of the shares in GLCs, which account for about a third of the US$270 billion share market, and give investors in the ETFs an indirect and more liquid exposure to these stocks.Awang Adek said the government is also keen to promote Islamic ETFs as part of its effort to make Malaysia an international Islamic financial centre."The Securities Commission is looking into this," he said.Earlier, he delivered the keynote address at the ETFs conference organised by Bursa Malaysia.