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Malaysia Shifts Bursa Malaysia Focus to Large-Cap Companies to Bolster Market Depth

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  //business-finance.news-articles.net/content/202 .. large-cap-companies-to-bolster-market-depth.html
  Published in Business and Finance on Wednesday, December 10th 2025 at 7:17 GMT by Free Malaysia Today

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Malaysia’s Capital Market Gets a Big‑Company Boost: A Detailed Summary of the Government’s 2025 Strategy

By [Your Name] – 9 December 2025

On 9 December 2025, Free Malaysia Today published a comprehensive report on a new initiative by the Malaysian government to re‑orient Bursa Malaysia – the nation’s principal stock exchange – toward large‑cap companies. The plan, which is part of a broader “Capital Market Strengthening Blueprint,” is designed to enhance market depth, attract foreign investment, and safeguard liquidity against the volatility that has plagued the market in recent years. Below is a full summary of the article, including key policy details, context, expert commentary, and the broader economic backdrop that motivated the move.

1. The Rationale Behind a “Big‑Company Focus”

Economic Context

• Recent Market Volatility: The Malaysian market has experienced sharp swings over the past three years, partly due to global supply‑chain disruptions and fluctuating commodity prices. Investors’ confidence has been eroded, especially in the mid‑cap segment, where fewer companies have the resources to withstand shocks.
• Capital‑Market Growth Targets: The Ministry of Finance (MOF) has set a 12 % annual growth target for the Malaysian capital market by 2030, part of the “Digital Malaysia 2030” vision. This requires a robust, liquid market that can support both local and foreign investment.

Strategic Objectives

• Stabilise Market Liquidity: Large‑cap companies bring higher trading volumes and deeper order books, thereby reducing the impact of large trades on price movements.
• Attract Foreign Institutional Investors (FIIs): FIIs tend to favour liquid, high‑profile stocks. A focus on big companies can help retain and increase their portfolio allocations.
• Improve Corporate Governance Standards: Larger firms are typically subject to stricter compliance and reporting standards, which can elevate overall market transparency.

2. Policy Details: How Bursa Malaysia Will Be Re‑aligned

A. New Listing and Maintenance Criteria

• Capitalisation Threshold: Bursa will revise its listing criteria, raising the minimum market capitalisation from RM 500 million to RM 1 billion for new listings. Existing mid‑cap companies that meet certain liquidity and revenue benchmarks will be incentivised to upgrade to the “Large‑Cap” section.
• Enhanced Disclosure Requirements: Companies in the large‑cap category must submit quarterly sustainability reports and adhere to the “Sustainability Reporting Standard (SRS)” mandated by the Securities Commission (SC).

B. Market‑Wide Structural Reforms

• Sector‑Specific Baskets: The exchange will create sector baskets (e.g., Technology, Energy, Finance) for large‑cap firms, allowing investors to trade more efficiently in niche markets.
• Trade‑Through Mechanisms: A “trade‑through” policy will enable the automatic transfer of liquidity from large‑cap to mid‑cap securities when a large‑cap company’s shares are delisted or face significant trading disruptions.

C. Incentives for Existing Companies

• Reduced Listing Fees: Large‑cap companies that voluntarily upgrade to the “Large‑Cap” section will receive a 15 % reduction in annual listing fees for the first three years.
• Tax Relief for ESG Compliance: Companies that demonstrate measurable ESG performance will qualify for a 5 % tax relief on capital gains generated through Bursa Malaysia.

3. Implementation Timeline and Governance

The Securities Commission will oversee compliance, while Bursa Malaysia’s Board of Directors will monitor the programme’s progress and liaise with the Ministry of Finance for policy adjustments.

4. Stakeholder Reactions

From the Government

• Finance Minister Dr. Anwar Ibrahim praised the initiative as a “step toward a resilient and internationally competitive market.” He highlighted that the focus on large companies would “bolster confidence among both domestic and foreign investors.”

From Bursa Malaysia

• Chairperson Tan Sri M. N. A. Rahman stated, “We’re excited to bring more depth to our market. The revised listing criteria will encourage robust corporate governance and provide a platform for high‑quality capital.” He also emphasised the importance of ESG metrics in this new framework.

From the Securities Commission

• Chairperson Lim Kim Lee stressed that “the SC’s primary role is to maintain market integrity. The new rules will ensure that large‑cap listings are not only financially sound but also socially responsible.”

From the Corporate Sector

• Sime Darby’s CEO, Tuan Mohd. Ali welcomed the move, noting that a larger capital base would support “future expansion plans in the agribusiness and renewable energy sectors.” However, he cautioned that the policy should not stifle innovation among mid‑cap companies.

From Market Analysts

• Dr. Leong K. S., a market strategist at CIMB, expressed mixed feelings. “While a focus on large companies can enhance liquidity, we must ensure that mid‑cap and small‑cap firms are not sidelined. Diversification is key to long‑term market resilience.”

• Ms. Nadia Rahman from Malaysian Investment Development Authority (MIDA) noted that “the policy aligns with MIDA’s objective of nurturing large corporates that can contribute to the country’s GDP growth.”

5. Potential Benefits and Challenges

Benefits

• Improved Liquidity and Price Discovery: Higher trading volumes and deeper order books reduce bid‑ask spreads.
• Greater Investor Confidence: Larger, well‑governed companies are perceived as less risky.
• Increased ESG Engagement: Mandatory sustainability reporting promotes corporate responsibility.
• Attraction of Foreign Capital: FIIs often allocate more capital to markets with higher quality, liquid stocks.

Challenges

• Exclusion of Mid‑Cap Innovators: Smaller companies may find it harder to meet higher thresholds, possibly hindering their growth.
• Implementation Complexity: Adjusting listing criteria and ensuring compliance will require significant administrative resources.
• Market Concentration Risks: Concentrating the market in a few large firms may reduce overall market diversity.

6. The Bigger Picture: Capital Markets as a Pillar of Malaysia’s Vision 2030

Malaysia’s long‑term national strategy, “Vision 2030,” seeks to transform the country into a high‑income economy, underpinned by innovation, digitalisation, and sustainable growth. A robust capital market is vital to this vision, providing the funding mechanism for new ventures, technology infrastructure, and green initiatives. By focusing on large companies, the government aims to create a stable, attractive platform for both local and foreign capital that can finance the infrastructure, industrialisation, and sustainability projects envisioned for the next decade.

7. Conclusion

The 2025 policy to steer Bursa Malaysia toward a “big‑company focus” marks a decisive effort by the Malaysian government to fortify its capital market against volatility, enhance liquidity, and improve corporate governance. While the move promises significant benefits—including higher market depth, increased foreign investment, and greater ESG compliance—it also raises legitimate concerns about market inclusivity and the future of mid‑cap companies. Ultimately, the success of this initiative will hinge on careful implementation, continuous stakeholder engagement, and the flexibility to adjust the framework as market dynamics evolve.

As Malaysia strides toward Vision 2030, this policy underscores the nation’s commitment to building a resilient, transparent, and globally competitive capital market—an essential engine for sustainable economic growth.